We once again find ourselves approaching the end of the current financial year (and what a year it has been!). Due to the COVID-19 pandemic, the ATO have increased the instant asset write-off threshold from $30,000 to $150,000. They have also expanded access to include businesses with a turnover of less than $500 million, up from $50 million.
What does this mean for my business?
Effectively managing the cash flow in your small business is essential to its success. The higher instant asset write-off threshold gives you the option to grow your business by purchasing eligible assets (each costing less than $150,000). The threshold applies on a per asset basis, so eligible businesses can immediately write‑off multiple assets.
The purchase of assets for your business, will help you to generate income immediately and has potential tax advantages. The threshold increase enables you to choose from a more diverse range of assets and immediately deduct them, which in turn will help to offset the cost of the equipment/asset.
The fine print
The instant asset write-off increase applies for assets purchased between 12th March 2020 and 30th June 2020. They can be new or second‑hand assets and must be first used or installed ready for use between these dates.
Eligibility criteria includes:
- Your aggregated turnover must be less than $500 million
- The cost of each asset must be less than $150,000 million.
This is only for the above-mentioned period (12th March 2020 – 30th June 2020).
It is important to note that from July 1st, 2020, the instant asset write-off will only be available for small businesses with a turnover of less than $10 million and the threshold will be $1,000.
There are a small number of assets that are excluded. Head to the ATO’s website for full details.
Small business equipment finance
Seek Financial can help with your equipment finance needs for your business which will enable you to maintain that all-important cash flow and working capital. We’ll work with you to find the right finance for your business and then negotiate and work with the lenders on your behalf to get you the most competitive deal.
Along with the potential tax advantages to make the most of, the advantages of equipment finance include:
- Equipment can generate immediate income
- Repayments let you budget more accurately
- A pre-approved line-of-credit means you have money in your back pocket ready for when you need it
- Unsecured loans so you don’t have to put your house on the line.
What equipment can I finance?
Any plant or equipment that can help generate income for your business can usually be financed. These include:
- Motor vehicles
- Commercial vehicles
- Engineering equipment
- Computer and technology
- Medical and dental equipment
- Office equipment
- General business equipment.
Please contact us to take advantage of the increased instant asset write-off threshold before 30th June 2020. Please also be aware that it may take several weeks for your loan to be finalised so if you are thinking about purchasing equipment for your business, we strongly recommend that you get the process started right away.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax and accounting advisors before engaging in any transaction.