$150,000 Instant Asset Write Off Extended
With the end of financial year just around the corner many business owners will be deciding if they need to purchase new business equipment before June 30. If you are not quite ready to make the financial commitment in our new ‘Covid-19’ environment, then we have some great news. The instant asset write-off limit of $150,000 has been extended to 31 December 2020. At the end of the year this increased limit of $150,000 will be reduced back to $1000.
What can you claim?
The asset purchased must be used in your business for an income-producing purpose. For example, a work vehicle or piece of equipment. If you are thinking of purchasing a work vehicle, there are some exclusions that you need to be aware of. For starters, if the vehicle is solely for carrying passengers, then the instant asset write-off is limited to $57,581. If you then use this vehicle for 75% business use, you can claim 75% of $57581 which equals $43,186. However, if you need to update the work ute, which is not deemed to be a passenger vehicle, then the full cost of the vehicle can be claimed.
Richard and his wife Amanda own a plumbing business. Richard and crew plumb and his wife Amanda does all the admin. As a savvy business owner Richard has decided he needs a new RAM ute. He is also going to have it decked out with canopy, toolboxes, roof racks and tow bar for a total cost of $90,000. A ute is not designed to solely carry passengers. It has a dual role of transporting tools and materials to a work site. In Richards’ case it has also been set up with the complete tradie requirements he needs. This means that the car cost limit for deprecation does not apply. Their business can claim a full deduction of $90,000 for the entire purchase cost of the ute as an instant asset write-off.
Amanda would also like to update her car. She would like a new Prado costing $70,000. As this is a passenger vehicle, she can only claim up to $57581 of the cost of the car. Additionally, she has calculated that she uses her car for 65% business use. The total depreciation claim that can be made is 65% of $57,581 which equals $37,428. Their plumbing business cannot claim the excess cost of the Prado under any other depreciation rules. As always, please seek professional advice to determine whether you can claim a deduction for such purchases.
Low doc loans for ABN holders
No Financials …. No hassles
As a self-employed small business owner, you know how hard it can be to organise finance. The time, the effort and all the paperwork hoops the banks make you jump through. The team at AAA are here to help you navigate the instant tax asset write off. At AAA Finance we specialise in helping ABN holders with easy Low Doc finance options. If you’re after new equipment, a new work car or even a new toy, call AAA Finance today. Find out how easy getting a Low Doc loan can be!
On a lighter note …
Plumbing joke (couldn’t resist it – sorry Richard)
Q. What’s the one thing you’ll never see a plumber do?
A. Bite his nails.