The ability for small business entities to claim an immediate deduction for assets costing less than $20,000 has been extended for another 12 months until 30 June 2019. Unless extended again, from 1 July 2019, the immediate deduction threshold will reduce back to $1,000.
TIP – There are no limits to the number of times you can use the immediate deduction assuming your cashflow supports the purchases.
TIP – If your business is registered for GST, the cost of the asset must be less than $20,000 after the GST credits claimed by the business have been subtracted from the purchase price – in other words, the GST exclusive price. If your business is not registered for GST, it is the GST inclusive amount.
TIP – Second hand goods are also deductible. However, there are a number of assets that don’t qualify for the instant asset write-off as they have their own set of rules. These include horticultural plants, capital works (building construction costs etc.), assets leased to another party on a depreciating asset lease, etc.
If you purchase assets costing $20,000 or more, the immediate deduction does not apply but small businesses have the ability to allocate the purchase to a pool and depreciate the pool at a rate of 15% in the first year and 30% for each year thereafter, which allows for faster depreciation than lager businesses have available to them.