Instant Asset Write Off
We are always looking out for our valued customers and fellow Australians, so we have to tell you about the Australian government’s Instant Asset Write-off income tax initiative. If you have yet to hear of it, you might have lost out on a lot of money!
We will focus on its role in the automobile trade, but note that it covers many other things, from stationery to IT hardware, even Air conditioners and Kitchen equipment, and a good bit more.
Instant Asset Write-off is a policy for incentivising and helping small to medium-sized businesses with their expenses, so it is cheaper for Australians to maintain and start a new business – removing the stress of risk but keeping the profit motive. The maximum limit for a write off is not $25,000, not $30,000, but for the year 2021, a maximum of $150,000! Though for this year, you can only write off a maximum of AU$59,136 for cars.
Any asset you buy for business purposes whose price is under the wide net of AU$150,000 is eligible in this scheme, which is a blessing if you were looking to get a car for your business. Although the value cap was rising even before the pandemic, the policy has not been permanent. Please, take advantage of it now before it is too late.
Please check out the Australian Tax Office’s (ATO) outline for a comprehensive list of which business or what item is eligible and what the terms mean, and how one goes about doing it. We will give you the answer in a simplistic form but double-check with your accountant or the closest one you have to it for their explanation.
It works by accounting for the phenomenon of depreciation: that some assets, like cars, lose their value on a year to year basis. By writing it all off from your taxable income in the same year of the purchase or use – you would be saving a lot of money in one year.
Say you were thinking to buy a car for anything under 150,000 dollarydoos.
A reliable 5th generation Toyota RAV4, for instance, ‘only’ roughly costs around $30,000, so it is perfectly eligible.
So too is the luxurious SUV from Porsche, the Porsche Macan, at approximately AU$80-90,000.
And if Australia’s electrical infrastructure were a bit better, we would happily recommend an EV like the Tesla Model 3, which starts now in Australia at $62k.
All these three vehicles are eligible for the Instant Asset Write-off initiative. Their depreciation can be accounted for in the same year and reduce the income tax you have to pay for that year, meaning your business can afford a more reliable – or even a tad luxurious – car.
Now, what if you do not have cash in hand to take advantage of this official offer? Well, this scheme works with business loans too, so think about acquiring a small business loan to get as much of this scheme as you can for your company. Remember not to loan up if you do not need to. Strategise a business plan beforehand, and remember prudence and patience conquers all.