Instant asset write-off thresholds
Using the simplified depreciation rules, assets costing less than the relevant instant asset write-off threshold are written off in the year they are first used, or installed ready-for-use. This threshold applies to each asset irrespective of whether the asset is purchased new or second-hand.
The threshold has changed over the last few years and during the current year as shown in the table below.
|Date Range||Threshold for each asset|
|7:30pm (AEDT) 02/04/2019 to 30/06/2020|
29/01/2019 to before 7.30pm (AEDT) 02/04/2019
7.30pm (AEST) 12/05/2015 to 28/01/2019
01/01/2014 to prior to 7.30pm (AEST) 12/05/2015
01/07/2012 to 31/12/2013
01/07/2011 to 30/06/2012
The entire cost of the asset must be less than the instant asset write-off threshold, irrespective of any trade-in amount. Whether the threshold is GST exclusive or inclusive will depend on your GST status, for further information about GST impacts see Cost.
In working out the amount you can claim, you must subtract any private use proportion. The balance (that is the proportion used in earning assessable income) is generally the taxable purpose proportion. While only the taxable purpose proportion is deductible, the entire cost of the asset must be less than the threshold.
Note that if you later sell or dispose of an asset for which you claimed an instant asset write-off, you include the taxable purpose proportion of the amount you received for the asset in your assessable income.
Example: Purchasing multiple assets
Barry owns a plumbing business. On 10 April 2019, Barry purchases and starts to use a new van for his business valued at $22,000. The following month he purchases and starts to use a trailer to support his business which costs him $14,000. Barry has spent a total of $36,000. As the $30,000 instant asset write-off threshold applies to each asset, Barry is able to claim both the van and the trailer in his 2019 tax return.
Example: Exceeding the threshold
Daryl owns an electrical business, Daryl’s Electrical, which qualifies as a small business. The business purchases a ute for $40,000 on 28 July 2017. Daryl estimates the ute will be used 40% of the time for his business.
Even though the value of the ute to the business is $16,000 ($40,000 × 40%), Daryl can’t immediately write it off. Instead he adds the $16,000 for the ute to Daryl’s Electrical small business pool.
Example: Immediate write-off
On 18 May 2018 Fiona buys a new powerful computer for $6,800 that she uses 80% of the time for business purposes and 20% of the time for personal purposes. She also bought a new printer for $700 which she uses for 100% of the time for business purposes.
For the computer, Fiona calculates her instant asset write-off as 80% (the business use proportion) of $6,800, so she claims $5,440. For the printer, she claims the entire cost of $700.
Fiona includes the combined amount of $6,140 at label A of the Business and professional items schedule which is filled out when completing her tax return.