“Instant Asset Write Off” winds back 30th June 2023 – what does that mean for my business?
Between 2019 and now, we have been living in a world of ever-increasing allowances for businesses to buy equipment such as vehicles and machinery and claim the purchase immediately in the year it was purchased (rather than claim depreciation over a longer period). This started at $20K in 2019, then went to $25K, $30K, $150K and then more recently an unlimited ability for most businesses to claim equipment of any value in the year of purchase.
This led to some immediate relief from tax for businesses, but you might have heard your contact at HQB warning you along the way along the lines of:
From 1 July 2023, the instant asset deduction returns to a limit of $20,000 for most businesses. Meaning that equipment up to $20,000 can still be claimed immediately, but anything of higher value will be depreciated.
If you want the claim for a larger amount for this year, the asset HAS to be installed and ready for use by 30 June 2023.
What you need to be aware of as a business owner is the impact of selling the equipment bought during the recent years of frenzied asset write offs.
Let’s look at the impact of trading in a Ute from 1 July onwards. Assume the following facts:
Impact on your 2024 tax return:
Note that we do not suggest that you hold onto old equipment due to tax. Rather we suggest that a transaction such as the one above has an impact on your overall tax planning strategy, and so we encourage you to consult with HQB on how to best manage this in your circumstances.
– James Davis
Posted 14 June 2023
This article is compiled as a helpful guide for your private information and is subject to copyright. We suggest that you do not act solely on the basis of material contained in this article because items are of general nature only and may be liable to misinterpretation in particular circumstances. We recommend that our advice be sought before acting on any of these crucial areas.