How Can Your Business Take Advantage of the ATO Instant Asset Write-off in 2020?

What are the ATO instant asset write-off rules for 2020? 

Originally, the instant tax write-off allowed small businesses with an annual turnover of less than $10 million to claim instant deductions up to a certain amount for second-hand or new equipment and plant asset purchases.

Under the new rule, businesses with an aggregate turnover of less than $50 million are now open to use this tax write-off up to $30,000. 

This initiative has been in existence since 2015. The current rules apply to any assets purchased between 2nd April 2019 and 30th June 2020. 



From 1st July 2020, the threshold reverts to $1,000. 

What equipment qualifies for the ATO instant asset write-off?

Identifying the assets that are eligible for this tax deduction is not as easy as one might think. 

The instant asset write-off is only applied to assets that are defined as “depreciating assets” under Section 40-30 ITAA 1997.

As a business owner, it is not easy to go through the definitions on your own; seek the counsel of a tax adviser in Perth who will help you to determine the eligibility of your assets for the write-off. 

Eligible assets include: 



• Office furniture (bookshelves, chairs, desks)
• An office vehicle
• Computers
• Some intellectual property like copyright, registered designs, and patents
• Quarrying, mining, or prospecting rights of information
• Some plant assets and new equipment
• In-house software (business-specific software that does not include cloud-based subscriptions or off-the-shelf products) 

Assets that might not be eligible for the instant asset write-off include:

• Consumable items and inventory
• Capital works like new structures and improvements
• Intangible assets like goodwill and computer software
• Land improvements on a mobile or immobile fixture
• Depreciating assets that are included in a claim for R&D tax reduction 
  

How much can you write-off?

How much you are eligible to write off depends on when you purchased the asset and the threshold amount associated with it. 

Since the thresholds keep on changing, check out the ATO website for more details. 

Most importantly, before you make any large purchase, speak to your tax accountants to determine the benefit (or otherwise) that a new purchase will have on your cash flow.

If you want to utilize the ATO instant asset write-off 2020, then you need to discuss the needs of your business with your accountants or business advisors.

Our advisers will take you through the appropriate legislation to find out if the assets you have are fit for the asset write-off or not – and whether any new purchases will qualify.