The Turbo-Charged Instant Asset Write-Off Scheme

The 2020-21 Federal Budget delivered great news for business owners’ and sole traders on 6 October 2020.

The Instant Asset Write-Off (IAWO) scheme has been turbo-charged to include new eligibilty criteria to assist and encourage SMEs and large businesses to invest in plant and equipment.

Treasurer Josh Frydenberg says the initiative will unlock investment opportunities for businesses by freeing up their cash flow.

“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a good manufacturing business will be able to expand its production line,” Mr Frydenberg says.

Key New IAWO Features

  • The $150,000 claim limit has been removed for new assets
  • The end date has been extended to 30 June 2022
  • Increased eligibilty from up to $500 million in aggregated turnover to $5 billion

The recent changes to IAWO means that instead of depreciating an asset over a number of years, businesses can effectively include the FULL COST of eligible asset as an expense in the current financial year.

This can reduce the company tax bill, provided they have purchased the asset after 6 October 2020, and installed the asset, ready for use by 30 June 2022. Multiple eligible assets can still be claimed in the same year.

What about second-hand assets?

  • Full expensing also applies to second-hand assets for SMEs (with an aggregated annual turnover of less than $50 million).
  • Businesses with aggregated annual turnover between $50 million and $500 million can still deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 under the existing instant asset write-off scheme.
  • SMEs that acquire eligible new or second-hand assets under the $150,000 instant asset write-off by 31 December 2020 will also have an extra six months, until 30 June 2021, to first use or install those assets.

Temporary Full Expensing

The government is calling the new 15-month initiative “temporary full expensing”. Full expensing in the year of first use will apply to new depreciable assets and the cost of improvements to existing eligible assets.

Help your business clients to maximise this government business stimulus by speaking to the asset finance aggregation experts at Platform Finance. We will work with you to find the best lender and finance product for your clients.

Get in touch with us today on 1300 88 77 54 to discuss your scenarios, or contact us online.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about the content. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek your own independent professional advice.