The Federal Government has announced that the Instant Asset Write-Off (IAWO) will be increased and expanded as part of the COVID-19 stimulus package.

Take advantage of this offer to reduce your tax bill and improve your cash flow.

The instant asset write-off threshold has been increased from $30,000 to $150,000. The turnover threshold has also been expanded to include businesses with aggregated annual turnover of less than $500 million (up from $50 million). This applies from 12 March 2020 until 31 Dec 2020, for new or second‑hand assets first used or installed ready for use in this time frame.

How does it work?

The IAWO is a tax deduction that reduces the tax liability of your business. It enables your business to claim an upfront deduction for depreciating assets in the year the asset was purchased and used (or installed ready to use).

The $150,000 threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets.

Timing

Assets will need to be used or installed between 12 March 2020 – 31 Dec 2020 to qualify for the higher threshold.

Who is eligible?

Trading businesses with an aggregated turnover of less than $500 million. You do not need to pay cash to qualify for these deductions, assets financed (via a Chattel Mortgage) are also eligible for the IAWO.

More information

To learn more and find out how to calculate your instant asset write-offs, visit the ATO website.

Contact your local Wedderburn representative today on 1300 933 337 or email sales@wedderburn.com.au to take advantage of the IAWO.

All contents in this article is information of a general nature and does not address the circumstance of any particular individual or entity.  You should consider seeking independent tax advice.

Editor’s Note: This post was originally published in April 2020 and has been updated for accuracy.