Key Points:

• $150,000 instant asset write-off extended until the end of 2020
• Designed to support businesses in sticking with investment plans
• Without this extension, the instant asset write-off would have reverted to $1,000 at 30 June 2020

Prime Minister Scott Morrison has extended the $150,000 instant asset write-off until the end of 2020, to encourage investment as part of his JobMaker plan.

“[These measures] are designed to support business sticking with investment they had planned, and encouraging them to bring investment forward to support economic growth over the near term,” said Treasurer Josh Frydenberg in a joint release with Minister for Employment, Skills, Small and Family Business Michaelia Cash.

The extension is estimated to cost $300 million and will be available to around 3.5 million businesses.

Without this extension, the instant asset write-off would have reverted to $1,000 at 30 June 2020 and would only be eligible to small businesses with a turnover of less than $10 million.

“The instant asset write-off also helps to improve cash flow for businesses by bringing forward tax deductions for eligible expenditure. The threshold applies on a per-asset basis, so eligible businesses can immediately write off multiple assets provided each cost’s less than $150,000.

“This extension will also give businesses additional time to acquire and install assets, as they will now have until the end of the year.”

The instant asset write-off has seen many incarnations over the past 12 months, with threshold increased in recent times, moving to $25,000 and then $30,000 in the build up to last year’s federal election, before jumping to $150,000 as part of the government’s first round of stimulus measures in response to COVID-19.

While tax data on the uptake of the instant asset write-off is currently not available for those higher thresholds, 2017-18 financial year tax data suggests that 360,000 small businesses benefitted from the previous $20,000 threshold. Present data suggests the average claim is over $11,000 for each of these small businesses.

If you have any questions or need advice and clarity specific to your business, feel free to contact Semmens & Co on 03 8320 0320 for a free consultation.