21 tips about the new & improved instant asset write-off – part 2
As I said in part 1 last week, in all my years as a business and tax advisor to small and medium businesses, there has never been a tax incentive that attracts as much interest as the instant asset write-off.
And now the instant asset write-off has become even more attractive!
What was to be until December a $150,000 limit for small businesses has now become a complete write of all equipment purchases for any business with turnover under $5billion.
In such difficult times as this, it can deliver even greater outcomes when combined with the carry back of company losses.
But before doing so, please ensure you have factored in the following considerations (see part 1 last for the first 7 tips):-
8/. Your small business must own the asset. Your business either needs to pay for it or finance it by a loan, hire purchase or by way of a chattel mortgage contract.
9/. Assets that your business leases from others do not qualify for the write-off (as one does not own the asset until the final payment is made or the lease contract is paid out early).
10/. The incentive also doesn’t apply to assets that are leased by your business to others.
11/. It’s not about when you buy the asset. Your entitlement to claim is based on when you held the asset first ready for use. So for assets you need to have installed, it is not when you buy it; it is when you can first use it.
12/. Make sure you when buy an asset to have the installation date agreed upon.
13/. Installation and delivery costs comprise part of the cost of the asset.
14/. If you trade-in an asset, it is the cost of the new asset that qualifies. So if your business buys a car for $50,000 and trades in an old car for $8,000, then the deductible write-off is $50,000.
Please come back to this web page next week for a further 7 tips and traps.
You can read our first 7 tips here.
We welcome any question you may have in the meantime.
At MRS, we will spend today planning for your success.