As a business owner, tax planning and budget management often go hand-in-hand with overall business strategy. One tax strategy that Australian businesses can take advantage of is the Instant Asset Write-Off (IAWO). This allows eligible businesses to write off the business portion of the purchase cost of an asset in the year the asset is first used or installed for use. With the end of the financial year (EOFY) approaching, now is the perfect time to understand how this scheme could benefit your business.
What is the Instant Asset Write-Off?
Originally introduced to stimulate growth and investment within Small to Medium Enterprises (SMEs), the Instant Asset Write-Off scheme underwent a few changes in October 2020. The federal government removed the $150,000 cap on purchases and extended the scheme through to June 2023. Consequently, there’s no cap limit on the cost of a new business asset purchased, offering great flexibility for businesses looking to invest in their growth.
Who is eligible for the Instant Asset Write-Off?
Eligibility for the IAWO scheme was broadened significantly with the new updates. Initially, the scheme applied to businesses with an aggregated turnover of less than $500 million. Now, it covers businesses with an aggregated turnover of up to $5 billion, meaning more businesses can take advantage of this opportunity.
This includes businesses across various sectors, from manufacturing, warehousing, and mining to agriculture, logistics, and construction. If your business falls under this broad bracket, it’s an opportunity not to be missed.
What assets are eligible for the Instant Asset Write-Off?
Almost all assets that are used or installed for use in your business are eligible for the write-off. This can include vehicles for your business, tools and machinery, office equipment, and even certain types of software. It’s also possible to claim multiple eligible assets of any dollar value and any improvements to new and existing assets.
How can I claim the Instant Asset Write-Off?
The IAWO scheme allows businesses to write off the business portion of an asset in their tax return for the financial year the asset was first used or installed for use. So, if you make a qualifying purchase before the EOFY, you can claim the write-off in this year’s tax return.
However, it’s essential to have a chat with a financial professional before making any large purchases. The intricacies of tax law can be complex and every business situation is unique. Consulting with a broker at Tailored Finance Group can help you navigate these waters and ensure you’re making the most of the Instant Asset Write-Off.
The Instant Asset Write-Off offers an excellent opportunity for businesses looking to upgrade their capital equipment, vehicles, or simply invest in their growth. As we approach the end of the financial year, now is the time to consider whether this scheme could benefit your business.
At Tailored Finance Group, our brokers are well-versed in the nuances of the Instant Asset Write-Off scheme. We’re here to help you understand if and how your business can benefit from it, ensuring you maximize your savings this financial year. Don’t wait until it’s too late – get in touch with a broker at Tailored Finance Group today to explore your options.