How your small business can claim the $150,000 instant tax write-off

Business isn't exactly booming right now.

Many merchants have struggled to stay afloat during lockdown, with some owners resorting to government handouts, business financing and tax-free grants to get by.

Fortunately there's good news. In light of the outbreak, the small business instant tax write-off has been increased from $30,000 to $150,000 in a bid to stimulate the economy as restrictions begin to lift.

If you're unsure about what to claim or want to know if your business is eligible, below is a quick summary to get you started.

What is the small business instant tax write-off?

This enables small businesses to immediately write off the cost of eligible items purchased throughout the past year, such as vehicles, tools and office equipment.

As of March 12, 2020, small businesses can now purchase eligible assets up to the value of $150,000 and lodge a claim until June 30. Assets purchased between April 2, 2019 and March 11, 2020 will qualify for an instant asset tax write-off of $30,000.

If you want to claim for either threshold, you'll need to make the purchase and use the asset for your business in the same year that you claim the deduction (before June 30, 2020).

Eligible assets

Business purchases will need to meet the below criteria in order to qualify for the instant tax write-off:

The entire cost of the asset must be less than $150,000 (from March 12, 2020) or less than $30,000 (before March 12, 2020)

This includes GST and doesn't just refer to the business-use portion of the asset. For instance, if you purchase a vehicle, this must include the total cost, not just a deduction based on your work usage.

The asset can be new or used, but it needs to have been used or installed in the income year you're claiming (a good incentive to install or use it before June 30).

What if I purchased multiple business assets?

Any single asset purchased up to $150,000 from March 12 or $30,000 before March 12 will qualify for the tax write-off.

If your purchases equal more than the threshold, these can be put into your small business asset pool, where you will be able to claim gradual deductions (or depreciation) each year.

Is my business eligible?

In order to claim the instant tax write-off for assets purchased before March 12, 2020, onwards, your business turnover must be less than $500 million over the past year.

To claim business assets purchased between April 2, 2019, and March 11, 2020, your business' turnover must be less than $50 million over the past year.

For more information around what you might be able to claim, visit the ATO's website.

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