Maximise Your Business Depreciation Deduction

Updated February 14th 2020

Tim Rooney

Take Advantage of instant asset write-off and Simplified Depreciation Rules

Instant Asset Write-Off

The instant asset write-off threshold has increased to $30,000 from 7.30pm (AEDT) 2 April 2019 and extended to 30 June 2020.

If you are a small business (with a turnover of less than $10 million), you can claim a deduction for each asset first used or installed ready for use, up to the following thresholds:

  • $30,000, from 7.30pm (AEDT) on 2 April 2019 until 30 June 2020
  • $25,000, from 29 January 2019 to 7.30pm (AEDT) on 2 April 2019
  • $20,000, before 29 January 2019

You may purchase and claim a deduction for multiple assets provided each asset cost is less than the relevant threshold.

From 2 April 2019, the instant asset write-off has also been expanded to include businesses with a turnover from $10 million to less than $50 million.

For assets purchased for $30,000 or more, the simplified depreciation rules can be used.

Simplified Deprecation Rules

Small business can pool together the cost of assets more than the relevant instant asset write-off threshold and claim:

  • a 15% deduction in the year you start to use them or have them installed ready for use
  • a 30% deduction each year after the first year

Claim a deduction for the balance of the small business pool at the end of the income year if the balance at that time (before applying the depreciation deductions) is less than the instant asset write-off threshold.

Not a Small Business?

The general depreciation rule sets the amount of the capital allowances (depreciation deduction) that can be claimed based on the asset’s effective life.

The effective life is how long an asset can be used to produce income, taking into account:

  • whether it’s subject to wear and tear at a reasonable rate
  • whether it’s maintained in reasonably good order and condition
  • the period within which it is likely to be scrapped, sold for no more than scrap value or abandoned

CIB can review the effective life of the asset used in your business to maximise your depreciation deduction.

To maximise your Business Depreciation Deduction, we recommend you:

  • Perform a review of the business plant & equipment
  • Purchase new equipment up to $30,000 and access the instant asset write off

We understand the complexity of depreciation and how to best navigate the process to ensure you maximise the cash flow benefits for your business.

Contact us for an immediate review of your business or plant and equipment assets.

Need to know more about Rental Property Depreciation Deductions?here’s what we recommend.