More info about the instant tax write-off ending in 2023
Tax season is looming over Australians, and many business owners are looking for any government initiatives they can access before June 30. One such incentive, the instant asset write-off, is one valuable cost-saving scheme that businesses are jumping to use before the end of the financial year, because unfortunately, FY22/23 will be the final year it is available.
The instant tax write-off was introduced during COVID-19 as a way to support business owners during difficult times. The incentive was extended twice and will unfortunately be coming to end with FY22/23. Once the program ends, business owners will have to go back to claiming asset depreciation over several years instead of instantly and within the year of purchase.
The ATO says, “Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.” This applies to any assets purchased and used between October 2020 and June 2023. For savvy business owners, this means jumping to purchase an asset before the end of the month. Luckily for Pickles customers, there are plenty of quality used vehicles and machinery ready to go!
If you’re tossing up on getting in on the instant asset write-off scheme, we’ve outlined the different ways you could prove eligible for the incentive.
Income: Businesses with a total annual income under $5B are eligible for new asset write-off, and businesses with aggregated turnover under $50M can write-off eligible used assets.
Dates: The asset must have been purchased and used between October 2020 and June 2023.
Thresholds: The asset must cost within the range of the ATO’s specified threshold. These thresholds have varied over the years so it’s important to check the ATO website for the most relevant information.
Eligibility for vehicle purchases
Cost: If you’re looking at purchasing to claim the initiative in FY22/23, the threshold for vehicles is $64,741.
Car limit: The ATO labels eligible vehicles as “designed to carry a load less than one tonne, and fewer than nine passengers”.
Usage: Vehicles are only eligible for the discount for the percentage of time it’s used for business purposes. For example, if a vehicle is used half the time for business and half the time for personal use, the deduction only applies to 50% of the vehicle’s cost.
Large vehicles: For vehicles that are used to carry over one tonne or nine passengers or more, such as utes or mini buses, an instant tax write-off of up to $150,000 is applicable.
Eligibility for business purchases
The incentive applies to all assets that are used to support business purposes. Although there are a handful of exceptions that the ATO do not consider applicable for the write-off. Examples of applicable purchases include:
- Fixtures & fittings
- IT equipment like computers, laptops, printers, phones
- Air conditioners
- Sheds & storage
If your business is eligible for the instant asset write-off and you want to take advantage of the initiative, you must remember that the asset bought must be ready for use before June 30. This can make it impossible to get a new asset in time, but not a quality used vehicle! Check out Pickles’ huge range of available assets, ready to roll out the door today!
For more information on what tools, assets and machinery you can claim on your tax return, visit the ATO website for the most up to date information.
*Please refer to the Australian Tax Office website to see whether your business qualifies for the instant asset write off. Please speak to your tax professional for advice tailored to your individual circumstances.