The Federal Government announced the Coronavirus Economic Response Package Omnibus Act 2020 on March 12 and 22, 2020.
This economic response package omnibus act of 2020 intends to provide businesses with an economic response and address other issues related to the Coronavirus.
According to the Australian Taxation Office: The instant asset write-off can be used for multiple assets, if the cost of each asset is less than the relevant, new and used asset threshold.
You must follow the simplified depreciation rules to claim the instant asset write-off as a small business. It cannot be used for assets not covered by the regulations.
Assets that are eligible for an instant asset write-off
Instant asset write-off eligibility criteria and thresholds have evolved. You must determine your company’s eligibility and apply the appropriate threshold amount based on the asset’s date of purchase, first use, or installation and readiness for use.
If the cost of each asset is less than the applicable threshold, multiple purchases can be written off instantly including new and used assets, and the simplified depreciation rules apply to most depreciable assets. These assets have a limited life expectancy (practical life) and can be reasonably expected to lose value (depreciate) over time.
Interactive Tax Depreciation applies to all newly acquired depreciating assets that are not immediately write-off eligible.
This concession allows for an immediate tax deduction of 50% of the cost of an eligible asset upon installation, with existing depreciation rules applying to the remaining cost. This measure will apply to eligible newly acquired (not previously used) depreciating assets purchased on or after March 12, 2020, and used or installed by June 30, 2021.
Because there is no upper limit on the cost of a depreciating asset that qualifies for this concession, it will be particularly beneficial for depreciating assets that are not eligible for the instant asset write-off.
Assets that depreciate include:
- Materials handling equipment (roll cages, plastic pallets, steel cages)
- Equipment and tools (for example, electric sanders and saws)
- Computer systems, laptops, and tablets
- Office equipment (stand-alone), office furniture (for example, coffee machines)
- Vehicles for transportation (cars, vans, and tractors).
- Some assets are exempt from the simplified depreciation rules or are treated differently under the rules.
Applying for Instant Write off
The Westminster National Finance Blog says that – instant asset write-off is a positive sign that the government is committed to assisting small businesses. This latest extension is expected to benefit approximately 3.4 million companies employing about 7.7 million workers, with total savings to small and medium-sized companies exceeding $700 million over the next few years. To maximise the value of this incentive, however, you must ensure that you claim correctly.
Some of the things to keep an eye out for:
- You cannot claim a write-off for an asset and then depreciate it in subsequent tax years. To avoid what they call “double-dipping.”
- Assets must be installed or ready to use during the fiscal year in which they are purchased – you cannot claim for items that will not be used for several years.
- You may claim only the business proportion of the asset.
Get AXIS Equipment Under Instant Asset Write-off
A variety of Materials Handling Equipment (MHE) and Returnable Transport Packaging (RTP) products, including roll cages, plastic pallets, plastic crates and bins, steel cages, and intermediate bulk containers (IBCs), are all eligible for Instant Asset Write-off.
With the Instant Asset Write-off program, you can get your hands on the equipment, allowing you to improve your cash flow, and reduce company tax whilst increasing the efficiency of your supply chain.
