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Growing a business perth 150k tax write off

INSTANT ASSET WRITE OFF INCREASED TO $150K

One of the governments forgotten stimulus package offerings has gone unnoticed and yet presents some great opportunities.

OK so the new asset write off has gone from $30K to $150K.

The reason we’ve not paid much attention is that who is going to spend $150K on CAPITAL EQUIPMENT today or in the near UNCERTAIN FUTURE?
HOWEVER there are a couple of new assets included in the CAPITAL EXPENSE WRITE OFF category that you must be investing in.

Your client relationships have changed dramatically and so too must your marketing plans. A critical area of your marketing plan is your digital footprint.

  • Website development
  • Software development

The time is now for proactive thinking in relation to your re-set and re-launch of your post COVID Information Technology structuring and one suspects there is a potential levelling of the once biased playing field away from the major early website adopters.

Consider ongoing changes:

  • Efficiencies with virtual meetings
  • Redesigned physical places of business
  • The merging of social media with business in recognition of emotional needs & intelligence
  • The prioritisation of community health requirements leading to behaviour changes
  • The recognition of the need for balanced personal past times in non-work time
  • A re-focus on life’s priorities
  • A new respect for employment and innovation
  • A growth of goodwill and genuine desire to help those in need.
  • Extreme changes to business models
    • Consumer purchasing online v physical shop front.
    • Expanded distribution channels

The Cap X concession along with other government packages remove funding as a reason for not taking action in this critical area. I suspect that the speed of business should be the final dot point above.

Whilst we are ‘locked in’ and taking things more slowly, I suspect post COVID business pace will pick up its natural trajectory expedited by tough economic conditions and the need to repay significant debt.

Further details of the CAPX write off.

The instant asset write off can be used for both, new and second-hand assets, with some limits and exclusions applying. We have highlighted and illustrated some key points to note below.

Eligibility

The acquisition date must fall between 12 March 2020 and 30 June 2020 to access the $150k write off.

More importantly, the date when the asset was first installed or ready for use is essential. Should the acquisition take place pre 30 June 2020, but not installed or ready for use until post 30 June 2020, the $150k asset write off cannot be applied and the normal write off/depreciation rules will apply. The instant asset write off will revert back to $1,000 from 1 July 2020!

Excluded assets

There are certain assets excluded from the instant asset write off thresholds above, as follows:

  • Leased assets, or expected to be leased assets for more than 50% of the time on a depreciating asset lease
  • Horticultural plants
  • Capital works deductions
  • Software allocated to a development pool (but not other software)
  • Asset allocated to a low value asset pool.

In addition to the above the car limit threshold will apply, which is $57,581 for the 2019/20 income year. For example should you purchase a new car for $90,000, you will be restricted to claiming $57,851, with the reminder foregone.

Summary

Taking the above into consideration, investing in new business assets between now and 30th June 2020 is a very worthwhile consideration with this concession reverting back to the $1,000 limit from July 1st.

Given interest rates have nose-dived significantly, accessing finance to fund the purchase of business assets adds further weight to a commitment now.

We recommend reviewing all of your business assets and consider all of the above. And as always, please get in contact with our Chartered Accountants team should you have any questions!

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