What is the Instant Asset Write Off Scheme… and who is eligible?
This initiative of the Australian Federal Government allows SMEs (small to medium businesses) to claim an immediate and full tax deduction for any purchases of assets up to a value of $30,000.
In April 2019, the government expanded this scheme and passed legislation to increase the asset value limit to $30k (from $25k) and make this available to businesses with an annual turnover of up to $50 million (previously $10M).
What Does It Change?
With a business ‘overhead’ expense – such as fuel for example – the business can claim this immediately as a tax deductable expense.
However, in the case of assets (capitol purchases), normally these are depreciated over the life of the asset.
For example a piece of equipment costing $24,000 with an expected asset life of 2 years (24 months), would be depreciated by $1,000 per month – allowing the business to claim a tax deduction of $1,000 each month.
Instead, the Instant Asset Write Off Scheme allows the business to immediately claim a tax deduction for 100% of the asset purchase. A very welcome cut to your next tax bill!
How Does it Benefit Businesses?
Being able to write off your asset purchase instantly brings forward the tax deduction… so that you can claim 100% of the purchase in your next tax return, rather than having to claim it in smaller portions over time.
Getting your tax saving now instead of later means that you get a faster return (ROI) on your asset.
What Tax Deduction Will I Get?
This, of course, depends on what tax rates apply to your business size and structure.
For this example, let’s assume that;
- Your tax rate is 27.5%
- You decide to purchase a CNC Plasma package valued at $25,000
You can then claim 100% of this expense within the current period, reducing your tax bill by $6,875.
($25,000 x 27.5% = a tax saving of $6,875)*
When Does this Scheme Finish?
As the legislation stand now, this scheme is available until June 30, 2020.
How can I use this to help me invest in a CNC Plasma?
You should consult your accountant to confirm your eligibility.
If you are eligible, the team at Jaymac CNC Plasma can help ensure that your purchase qualifies.
So… How Much Does a CNC Plasma Cost?
This depends on the model of CNC unit, plasma cutter, and any additional accessories that you chose.
We’ve made it super easy to get an instant online quote. Just follow the prompts, select the options that best suit you and we’ll give you an on-screen- quote, complete with indicative finance cost as well!
What if my purchase is over $30,000?
If you decide to invest in a CNC Plasma package that exceeds $30k total, this will not necessarily exclude you from becoming eligible to claim the instant write-off.
Talk to the team at Jaymac about how we can assist you to qualify.
How many times can I claim?
Each separate asset must qualify under the threshold amounts, however there is no limit to how much in total you can claim under instant asset write-off.
So yes, you can claim multiple assets.
Do I have to pay cash, or can I finance?
You have to purchase the asset to qualify, however you can use equipment finance to enable the purchase an asset.
Note that leasing is not the same as purchasing and as such won’t qualify under immediate write-off. You should check with your accountant to confirm the eligibility of your intended finance method.
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The information contained here is general in nature and you should consult with your accountant before making any decisions. The examples given are for general reference only and may not accurately represent your situation. E.&O.E.