On 12 March 2020, the government lifted the limit of the instant asset write-off from $30,000 to $150,000, and expanded eligibility to include businesses with annual turnover below $500 million, up from a previous $50 million, until 30 June.
However, new research by SME lender OnDeck Australia has confirmed that some 35 per cent of Aussie SMEs are not familiar with the tax savings.
“This write-off is available to 3.5 million Australian businesses. So, it is a concern that over one million enterprises could miss out on the opportunity to save on tax today while investing for tomorrow’s growth, because they are unaware of the write-off,” said Oliver Wade, head of marketing and partnerships, OnDeck Australia.
Conversely, the research also suggested that 46 per cent of SMEs that are aware of the instant asset write-off are likely to take advantage of it, with close to half admitting they will purchase new IT equipment, followed by a new vehicle, manufacturing equipment and office furniture.
According to the ATO, the new threshold of $150,000 applies for a limited time only for depreciating assets first used or installed ready for use between 12 March 2020 and 30 June 2020. After 30 June 2020, the threshold will reduce to $1,000.
In April, professional services firm RSM explained that most tangible assets that decline in value over time will be eligible for the instant write-off, except a small number of exclusions.
Among the excluded assets are trading stock items, land, non-farming buildings and capital works, horticultural plants, water facilities, fodder storage assets and farm fencing.
While motor vehicles will be eligible assets, the car cost limit of $57,581 for 2019–20 will still apply to cap deductions for cars, RSM reminded.
