How did you spend 29th June 2020? We hope your end of financial year wasn’t too stressful in what has already been a stressful year for many.
We recently chatted with Peter Beams, Accounting Advisory Director at Farrar Gesini Dunn, and our own Hedley Middlebrook, centreRED’s Head of Sales and Account Management, about how to leverage improved asset write-offs and tax minimisation strategies in the lead up to the end of financial year.
But hasn’t the end of financial year already passed? Why are we still talking about this?
Well, the good news is that the Australian Government recently announced its extension of the $150,000 instant asset write-off until 31 December 2020. This means you still have a few months to use this to your advantage – each asset you buy for your business has had its instant asset write-off threshold increased from $30,000 to $150,000. And in addition, the eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million.)
Under the instant asset write-off, eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed.
Here, Peter and Hedley give their best tips on how you can best use the instant asset write-offs to your business’ advantage:
- If you were going to spend the money this financial year, spend it now. If you can bring it forward to get a tax advantage, then do it.
- The only exception to the instant asset write–off is cars – there is a luxury car limit of $58,000.
- The asset has to have been purchased and first installed, ready for use between 12th March and 31 December 2020.
- If you purchase assets above the $150,000 you will still get a 50% write-off for that asset upfront, and then depreciation will apply to the balance.
- Use the opportunity of the instant asset write-off to innovate – review how you work and upgrade or purchase new technology and equipment to make it work.
- Consider higher spec laptops such as the Microsoft Surface and HP Elite Book ranges, which support remote working applications and requirements much better.
- Make sure you find out if you are an eligible business before you go out and buy. Check to see if your business is eligible and for further information visit the ATO website here.
For more tips on the instant asset tax write-off and how it can work for you, watch our webinar on strengthening your position before EOFY or get in touch with us today to ensure you can make the most of the ATO’s extension.