Instant Asset Write-Off Scheme extended to 31 December 2020

The Government announced on 9 June 2020, that it will extend the Instant Asset Write-Off Scheme (IAWO) from 30 June 2020 to 31 December 2020. The scheme provides those who are eligible, an immediate tax deduction for the cost of a depreciating asset, either new or second-hand costing less than $150k. The deduction can be …

The Government announced on 9 June 2020, that it will extend the Instant Asset Write-Off Scheme (IAWO) from 30 June 2020 to 31 December 2020.

The scheme provides those who are eligible, an immediate tax deduction for the cost of a depreciating asset, either new or second-hand costing less than $150k. The deduction can be accessed by businesses with an aggregated turnover of less than $500m.

Under the measure the asset must be acquired and installed, ready for use by 31 December 2020.

IAWO and cars

Care must be taken if you intend on using the IAWO for cars.  Broadly, under the depreciation provisions, the maximum depreciation you can claim on a car is limited to $57,581 for the 2019-20 financial year.

For example, if you purchase a “car” for $100,000, the maximum you can claim under the IAWO is $57,581. In addition, the maximum GST you can claim on the purchase is limited to 1/11th of $57,581 i.e. $5,234.

Please contact NCA here to discuss the implications of purchasing a car to access the IAWO.

Finally, if you wish to claim a deduction during the June 2020 financial year, you need to have the asset/vehicle delivered and ready for use by 30 June 2020 to claim a deduction this year. If delivered after 1 July 2020 but before 31 December 2020, it may be deductible next year (pending finalisation of the legislation for the extension).