Make the most of the Turbocharged Instant Asset Write-Off Scheme

The weeks are counting down till your business has to make use of the unlimited Instant Asset Write-Off scheme’s threshold!

That’s right, the turbocharged scheme allows businesses with a turnover up to $5 billion, to immediately write-off any eligible depreciable asset, at any cost, up until 30 June 2023.

The scheme also includes both new and second-hand assets.

Better yet, the threshold applies on a per asset basis, so eligible businesses can immediately write off multiple assets.

Is your business eligible?

The scheme can be accessed by businesses with an annual turnover of up to $5 billion.

For example, assets that could be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business.

But it’s not enough to simply purchase the asset to be eligible. The new or second-hand asset must also be first used, or be installed and ready for use, this financial year.

Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.

Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your business’s cash flow, as by claiming this larger deduction you will pay less tax, leaving you with more cash to use in your business today.

Grace’s Harvester: a case study

Grace owns an agricultural company, Grace’s Grains Pty Ltd, which has an aggregated annual turnover of $20 million for the 2022-23 income year.

Grace’s Grains Pty Ltd purchases a combine harvester for $600,000, exclusive of GST, on 15 February 2023.

Under the temporary full expensing scheme, Grace’s Grains Pty Ltd can claim a deduction of $600,000 for the full cost of the combine harvester.

At the 2021–22 tax rate for small and medium companies of 25%, Grace’s Grains Pty Ltd will pay around $105,000 less tax in 2021–22, improving the company’s cash flow, and helping Grace reinvest and grow her business.

Limits relating to cars

Now, there’s a limit relating to cars that we should note.

If you purchase a car for your business, the Instant Asset Write-off is limited to $57,581 (the business portion of the car limit) for the income tax year.

You cannot claim the excess cost of the car under any other depreciation rules.

Also, say the vehicle will be used 80% of the time for business purposes and 20% for personal usage, you can only claim deductions for 80% of the asset.

Getting finance that’s right for your business

When purchasing an asset under this scheme, it’s crucial to select the correct finance product.

And that’s where our team of expert brokers can help. We can present you with financing options for the instant asset write-off scheme that are well suited to your business’s needs now, and into the future.

So if you’d like help obtaining finance that’s gentle on your cash flow, and helps you achieve your long-term goals, please get in touch – we’d love to help out.