You leant him your DVD of “Grease”? Well, that’s an Instant Asset Write-Off…you’re not getting that back.
While that is what it could mean, that’s not what the Australian Taxation Office thinks it means.
The nuts and bolts of what it means is an asset that uses simplified deprecation rules. This means that is the asset costs less than then the instant asset write-off threshold then instead of being added your asset register with a long-term depreciation value, they are written off the year they are bought. This can be a first- or second-hand item.
When instant asset write-off was first brought in by the ATO the threshold was $1000, however, today as of this writing the threshold is $20,000 inclusive of GST. That is assuming that you are not registered for the GST.
If you are registered for the GST, the current threshold is $20,000 exclusive of GST. Simply put it’s because you already claimed a credit the GST you paid on the activity statement and the ATO doesn’t like people that double dip.
If the asset is 100 per cent used for the business, this next part is going to be simple. However, if some of the asset is used for personal use then you must subtract a portion you would deem acceptable for that personal use.
What’s left is considered the taxable purpose proportion and is deductible. You will only have to do this if the total cost of the asset is under the threshold.
Sounds pretty straight forward?
We think so as well.
However, there is one more little bit to remember. If you later sell the asset that you claimed as a instant asset write off you will need to include the taxable purpose proportion amount you were paid for in your assessable income for that financial year.
There are plenty of fun things like this when it comes your business finance, if it’s not the type of thing that you want to think about then you can put
Balanced Bookkeeping and Business Solutions behind the finance steering wheel and we’ll get you to where you need to be just like we have done for hundreds of other Sunshine Coast businesses.
Sunshine Coast Bookkeeping Services – Xero, Myob, BAS Agents