2019-20 Federal Budget

Key points

The Government has announced that it will:

• increase the instant asset write-off threshold from $25,000 to $30,000; and
• expand the instant asset write-off to make it available to medium-sized businesses (aggregated annual turnover of $10 million or more, but less than $50 million), in addition to small business entities (SBEs).

Assets eligible for the immediate write off assets must cost less than $30,000 and be:

• for SBEs — first used, or installed ready for use, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020;
• for medium-sized businesses — acquired and first used, or installed ready for use, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020.

The Government will still proceed with its previously announced measure to allow SBEs an instant asset write-off for eligible assets costing less than $25,000 (increased from the current threshold of $20,000) that are first used or installed ready for use from 29 January 2019 until 7.30pm (AEDT) on 2 April 2019.

Background

Under the current law, small business entities (SBEs) are entitled to claim an immediate deduction for purchases of eligible assets costing less than $20,000 that are first used, or installed ready for use, by 30 June 2019. 61 For all other taxpayers, the threshold is $1,000.

On 29 January 2019, the Government announced that:

• the instant asset write-off would be extended to 30 June 2020; and
• the instant asset write-off threshold would be increased from $20,000 to $25,000, with effect from 29 January 2019.

A bill to give effect to this announcement was introduced into the House of Representatives on 13 February 2019, where it remains.

Announcement

As part of the 2019–20 Federal Budget, the Government announced that it will:

• increase the instant asset write-off threshold from $25,000 to $30,000; and
• expand the instant asset write-off to make it available to medium-sized businesses (aggregated annual turnover of $10 million or more, but less than $50 million), in addition to SBEs.

These measures will apply to eligible assets costing less than $30,000 that are first used, or installed ready for use, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020.

Note: It is intended that small businesses can continue to place assets which cannot be immediately deducted into the small business simplified depreciation pool (the pool) and depreciate those assets at 15 per cent in the first income year and 30 per cent each income year thereafter. The pool balance can also be immediately deducted if it is less than the applicable instant asset write-off threshold at the end of the income year (including existing pools). The current ‘lock out’ laws for the simplified depreciation rules — which prevent SBEs from re-entering the simplified depreciation regime for five years if they opt out — will continue to be suspended until 30 June 2020.

Medium-sized businesses do not have access to the small business pooling rules and will instead continue to depreciate assets costing $30,000 or more in accordance with the existing depreciating asset provisions of the tax law.

Important

The Government intends to proceed with its announcement of 29 January 2019, so that SBEs will be able to immediately deduct purchases of eligible assets costing less than $25,000 that are first used or installed ready for use in the period from 29 January 2019 until 7.30pm (AEDT) on 2 April 2019.

Summary of relevant dates for instant asset write-off

• Back to Federal Budget summary 2019–20

First published on 3 April 2019 – https://taxbanter.com.au/wp-content/uploads/2019/04/Federal-Budget-2019-20.pdf?utm_source=The+Assessment&utm_campaign=5cfd6307dd-2017_18_FedGov_Budget_summary_COPY_01&utm_medium=email&utm_term=0_4ef5882f06-5cfd6307dd-380161973