27 April 2020 ·

The Instant Asset Write-Off Explained

Instant Tax Write-Off

The latest Government Economic Stimulus Measures mean now’s YOUR BIGGEST OPPORTUNITY to SAVE THOUSANDS on your TAX this Financial Year.

As part of the federal government’s response to the COVID-19 outbreak, the existing instant asset tax write-off initiative has been extended from $30,000 per asset up to $150,000 per asset. This gives businesses an incentive to make a large purchase, such as hatch, wagon, sedan or BT-50.

These expanded measures are already in effect for businesses with annual revenue up to $500m with the scheme set to close on June 30, 2020.

The rules allow businesses to immediately write off the cost of assets – under the threshold – and claim a tax deduction for the business portion of the expense in the first year the asset is used or installed. New and used vehicles are eligible.

It is important to note that the depreciation a business owner can claim is still limited to $57,581 for cars*.

The government is hoping that these initiatives will encourage investment and provide a much-needed cash injection to the economy. Businesses who finance the purchase of assets are equally eligible to the instant write-off scheme and can continue to expense appropriate interest payments over the life of the loan.

The information above is provided on a general advice basis and should not be considered as a replacement for seeking your own professional advice, appropriate to your business. Mount Gravatt Mazda recommends that you seek your own professional advice prior to any vehicle purchase, to confirm eligibility.

If you are considering taking advantage of this incentive then Mount Gravatt Mazda has a large range of vehicles which fall under this claiming threshold. View our current stock.

What can be classified as a car?

For this initiative, a car is defined as a vehicle “designed to carry a load of less than one tonne and fewer than nine passengers”

Can multiple cars be purchased?

Yes, multiple assets can be purchased – even if they are identical the $150k threshold is applied on an asset-by-asset basis. So long as the cost of each eligible car is under $150k the write-off can be made.

Are second-hand cars eligible?

Yes. Some exclusions and limits apply. See the ATO website for more info.

What if I am trading in a vehicle to buy a new one?

A trade-in has no impact on the cost of an asset. The trade-in just reduces the net amount paid for the asset, not the cost of the asset. The full cost can still be written off.

What businesses are eligible for the immediate write-off?

Businesses with an annual turnover under $500 million per year.

Can I finance the purchase of a new car and still be eligible?

Yes. Leased assets do not qualify as the business itself does not take ownership of the asset. Speak to one of our Finance Managers to see if your business qualifies for finance.

Learn more about the Instant Tax Write-Off by visiting the ATO

Are you ready to take advantage of this threshold increase and upgrade your business vehicle? Chat to our team today about how we can assist in keeping your business moving!