With the dust having recently settled on the outcome of the Federal Election, the spotlight on the Australian Parliament has now been directed towards the debate surrounding the passing of the Coalition’s 2019-20 Budget Package that was announced by Federal Treasurer, the Hon. Josh Frydenberg, on 2 April 2019.
Specifically, media discussion has centred around whether the Australian Labor Opposition will support the Coalition’s Tax cut package which will provide an immediate tax refund to those earning up to $126,000 per year and legislate tax cuts for all wage earners over the next 4 years.
While this debate rages, it is important to note that one of the business tax measures announced during the Treasurer’s Budget speech is available to all businesses now – and has been available since 7.30pm on the night of the speech.
That measure is increased availability of the Instant Asset Write off which provides the capacity to fully depreciate investment in eligible assets during the current tax year.
On 2 April 2019, the Australian Government increased the allowable value of the income tax write-off from $25,000 to $30,000 for asset purchases made between 2 April 2019 and 30 June 2020. “More importantly, the annual income threshold for eligible businesses was immediately increased from $10M in annual revenues to $50M in annual turnover”, said ACAPMA CEO Mark McKenzie. Essentially, this means that the opportunity to immediately offset asset purchases against their tax liability has been greatly expanded – and is available to many businesses now.
For Australian businesses with annual turnover between $10M and $50M, the tax concession is available for each asset purchased and first used or installed after 2 April 2019 and before 30 June 2019 (and during the 2019/20 financial year), up to a maximum value of $30,000.
For Australian businesses with annual turnover of up to and including $10M, the tax concession is stepped and is available for assets purchased and first used or installed up to the following maximum values:
- Up to $30,000 for assets purchased after 2 April 2019 and before 30 June 2019
- Up to $25,000 after 29 January 2019 and before 2 April 2019.
- Up to $20,000 after 1 July 2018 and before 29 January 2019.
“The two most important messages are first, that these tax concessions are available now and second, that they can be accessed for each investment up to the maximum values indicated”, said Mark.
“The decision by a significant number of eligible businesses to invest and take advantage of these concessions now will not only benefit the businesses involved but may also help to put the Australian economy into a stronger position over time”, said Mark.
As with all investments, business owners should speak with their accountant before making significant investment decisions and/or speak with a commercial asset broker to better understand the overall merits of their investment (A list of commercial asset finance brokers can be obtained via https://www.cafba.com.au/)
Further information about the current instant asset write-offs can be obtained by visiting the Australian Taxation Offices website.