Is it time to take advantage of the $20,000 instant asset write-off?

By Geoff Scofield, Westlawn Finance MD & CEO
30 May 2017

In the May 2017 Federal Budget, it was announced that the $20,000 instant asset write-off for small business would be extended for another 12 months and would be available for businesses with an annual turnover of up to $10 million. The measure, first announced in the 2015 Federal Budget, was due to revert back to the previous, far less generous arrangements, after 30 June 2017.

While this sounds like great news for small business, a new survey reveals that many small business owners are not taking advantage of the measure.

A national survey of 809 small business owners recently conducted by H&R Block and Officeworks found that 78% of SMEs don’t fully understand the $20,000 asset write-off, while just one in 10 business owners could correctly identify items that can be claimed as an asset write-off.

It’s perhaps unsurprising then that 67% of small businesses are not taking advantage of the tax break.

What is the $20,000 instant asset write-off?

The $20,000 instant asset write-off allows small businesses to immediately deduct assets costing less than $20,000, instead of claiming deductions over a number of years. It is primarily intended for physical assets such as equipment, vehicles, tools and electronics.

Initially available to businesses turning over up to $2 million annually and set to finish at 30 June 2017, the government announced in this year’s Budget that the scheme would be extended to businesses with up to $10 million in annual turnover and will be available until 30 June 2018.

Assets that may qualify for the instant write off include:

  • IT hardware such as computers, printers, scanners and photocopiers
  • Office or shop furniture and fittings, kitchen equipment
  • Display screens and signage
  • Work vehicles such as a $19,999 ute.
  • Tools and machinery
  • Plant and equipment.

According to the ATO website, the following are excluded from the $20,000 instant asset write-off:

  • Assets that are leased out for more than half of the time on a depreciating asset lease
  • Assets already allocated to a low-value pool
  • Horticultural plants, including grapevines – these are covered by specialised deductions
  • Capital works
  • Software.

Before making any decision as to whether the $20,000 instant asset write-off may be suitable for your business and what assets are eligible, you should first speak to your accountant or other tax professional.

How one plumber twice took advantage of the tax break

In You can claim your website under the $20,000 instant asset write-off scheme, published in the Sydney Morning Herald on 24 May 2017, Tom Harley, who runs Aussie Plumbing and Gutters, said he has taken advantage of the $20,000 tax break.

Before the end of the 2015-2016 financial year, the company bought a $20,000 ute. Rather than depreciating the asset, Tom was able to write it off immediately.

“This year I bought new Apple Macs for the office, which we can immediately write off. So we’re up to date with the latest technologies and buying the ute means I have an extra person on the road,” Harley told the Herald.

Westlawn business finance

At Westlawn, we can provide a variety of financing solutions tailored specifically for your business. And with access to major commercial lenders as well as Westlawn’s own finance options, we can offer your business greater choice and flexibility.

We specialise in providing finance for a wide variety of business purposes including plant and equipment, commercial vehicles, earthmoving and construction, dental and medical, and office equipment.

You should first speak to your accountant or other tax professional before deciding whether the $20,000 instant asset write-off may be appropriate for your business.

To find out how we can help with finance to take advantage of the $20,000 instant asset write-off, contact a Westlawn Business Finance Specialist today.

Call us on 1300 WESTLAWN (1300 937 852).

Copyright © 2017


The information provided in this article is general information only and is provided without considering your individual business situation. You should first seek your own independent professional tax advice from an accountant before making any decision as to whether this may be suitable for you. Westlawn Business Finance Specialists do not provide tax advice.