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  • Instant asset write-off

    Using the simplified depreciation rules, assets costing less than the instant asset write-off threshold are written off in the year they are bought and used, or installed ready-for-use. This applies irrespective of whether the asset is purchased new or second-hand.

    The current threshold is $20,000. It has changed over the last few years as shown in the table.

    Instant asset write-off thresholds

    Date range

    Threshold

    7.30pm (AEST) 12/05/2015 to 30/6/2018

    $20,000

    01/01/2014 to prior to 7.30pm (AEST) 12/05/2015

    $1,000

    01/07/2012 to 31/12/2013

    $6,500

    01/07/2011 to 30/06/2012

    $1,000

    The entire cost of the asset must be less than the instant asset write-off threshold, irrespective of any trade-in amount. This table assumes that you are not registered for GST, for further information about GST impacts see Cost.

    In working out the amount you can claim, you must subtract any private use proportion. The balance (that is the proportion used in earning assessable income) is generally the taxable purpose proportion. While only the taxable purpose proportion is deductible, the entire cost of the asset must be less than the threshold.

    Note that if you later sell or dispose of an asset for which you claimed an instant asset write-off, you include the taxable purpose proportion of the amount you received for the asset in your assessable income.

    Example: Exceeding the threshold

    Daryl owns an electrical business, Daryl’s Electrical qualifies as a small business. The business purchases a ute for $40,000 on 28 July 2016. Daryl estimates the ute will be used 40% of the time for his business.

    Even though the value of the ute to the business is $16,000 ($40,000 × 40%), Daryl can't immediately write it off. Instead he adds the $16,000 for the ute to Daryl’s Electrical small business pool.

    End of example

     

    Example: Immediate write-off

    On 18 May 2016 Fiona buys a new powerful computer for $6,800 that she uses 80% of the time for business purposes and 20% of the time for personal purposes. She also bought a new printer for $700 which she uses for 100% of the time for business purposes.

    For the computer, Fiona calculates her instant asset write-off as 80% (the business use proportion) of $6,800, so she claims $5,440. For the printer, she claims the entire cost of $700.

    Image of the 'Small business entity simplified depreciation' field - Question 10 on tax return.

    Fiona includes the combined amount of $6,140 at label A of the Business and professional items schedule which is filled out when completing her tax return.

    End of example
      Last modified: 10 Oct 2017QC 21100