In the 2018/19 Federal Budget the Government announced it will extend the $100% write-off depreciation write-off, by a further 12 months, to 30 June 2019. This is for ‘small business entities’ with aggregated annual turnover less than $10 million (s328-110 of the ITAA97). The $20k instant asset write-off, was first announced in the 2015-16 Federal Budget.
Small businesses, will be able to immediately deduct purchases of eligible assets costing less than $20,000 first used or installed ready for use by 30 June 2019. Only a few assets are not eligible (such as horticultural plants and in-house software).
Small businesses can continue to depreciate assets valued at $20,000 or more, by placing them into a small business simplified depreciation pool, where a 15 per cent depreciation rate applies in the first year and a 30 per cent each income year thereafter. Also, the undetected balance in the ‘pool’ can be deducted immediately, if the balance is less than $20,000.
The current ‘lock out’ laws for the simplified depreciation rules (these prevent small businesses from re-entering the simplified depreciation regime for five years, if they opt out) will continue to be suspended until 30 June 2019.
The immediate deductibility threshold and the balance at which the pool can be immediately deducted are normally $1,000.
[Treasury website: Budget Paper, Part 1 – Revenue Measures, p20; Tax Month May 2018]
Study questions (answers available)
- Will the 100% write-off, for sub-$20k depreciable assets being extended 24 Months, to 30 June 2020?
- Can $20k+ depreciable assets be placed into a ‘small business depreciation pool’ for 15%/30% depreciation?
- Will the so called ‘lock out laws’ be suspended, to 30 June 2019?
- Is the cost threshold, for a small business immediate (100%) depreciation deduction, normally $10,000?
