Instant Asset Write-Off Increased

in BigBox Motoring Advice

Buying a car for your business? The instant asset write-off threshold has been increased to $150,000 and expanded to include businesses with an annual turnover of less than $500 million.

With the threshold for immediately deductible items (including cars) raised from from $30,000 to $150,000 for business with annual turnover of less than $500 million (up from $50 million) any equipment purchased for your business from 12 March 2020 will be 100% written off your tax until 31 December 2020.

What is the Instant Asset Write-Off?

It’s obviously more complicated than the government just handing out $150,000 tax returns for free.

This form of accelerated depreciation allows you to reduce your taxable income by $150,000 – resulting in a cash flow benefit relative to the rate you’re taxed at.

In real terms, this means that small businesses will have a less complicated tax return to complete, as their assets will either qualify for the immediate write-off or, if the asset is valued over $150,000, with depreciation based on useful life. For example, the ATO assesses the useful life of a business vehicle at a maximum of 8 years.

In order to make the most of the deductions, businesses would have to claim before December 31 of this year in order to maximise cash flow benefits with any assets claimed.

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What can I claim?

The allowance permits for any asset you need to run your business including cars, vans and operating equipment (such as new furniture for a café or extra water tanks for a nursery). In terms of business vehicles (designed to carry a load of less than one tonne and fewer than nine passengers), you may be able to claim an immediate deduction where the cost is less than $57,581 excluding GST. The significance of $57,581 is that this represents the car cost depreciation limit, so regardless that the concession applies to assets up to $150,000 excluding GST, the concession for cars defaults to the $57,581.

For other motor vehicles, e.g. commercial vehicles designed not principally to carry passengers, may be able to claim an immediate deduction where the cost is up to $150,000 excluding GST. This could be a used van to make your café mobile during lunchtimes, or upgrading to a new cab chassis ute to fit an existing tray setup.

Assets over $150,000 can be fully written off, but not immediately. You can group your assets that exceed the threshold in order to depreciate them at the same rate (15% in the first year, 30% for every year after that). It is also worth noting that if an existing asset is in a depreciation pool and will be valued at less than $150,000 by December 31, 2020 it can be written off under this new method of accelerated depreciation.

Buying a car

If you do need a business vehicle, BigBoxCars has dedicated, expert teams across our dealerships who can help you with solutions to get you on the road with expertise in sales, service, finance and insurance. We also have a fantastic range of used cars under $150,000 for your business. They will also be able to give you more specific information for your business needs.

At BigBoxCars we have discovered a better way to buy and sell used cars. We have taken away the bits that were most painful and re-invented the whole process!

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​​The next time you need to have your vehicle serviced, visit BigBoxCars Service & Tyres and put your mind at ease whilst our professional technicians take the time to ensure your tyres are well-cared for, and that you’ll be traveling smoothly and safely.

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