Article published 21 October 2020
Earlier this year, the Morrison Government raised the limit of the instant asset write-off from $30,000 to $150,000. From 12 March 2020 until 31 December 2020 the instant asset write-off the threshold amount for each asset is $150,000 (up from $30,000) eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).
The 2020/21 Federal Budget later built on this, with a virtually unlimited price cap for many businesses.
To be precise, businesses with annual turnover up to $5 billion, will be able to write off the full value of any eligible asset they purchase for the business until June 20221.
It’s great news for small and medium enterprises (SMEs), who may be able to enjoy a tax break today while investing in new equipment for future growth – and cars are a popular choice.which can enjoy a tax break today while investing in new equipment for future growth – and cars are a popular choice.
Research shows one in two businesses would use the expanded instant asset write off to buy a new vehicle2. But there is a catch that business owners should be aware of.
While most types of business equipment could be eligible for the $150,000 instant write off, cars don’t share the same unlimited price threshold. If you’re thinking of buying a Lamborghini or Porsche for the business, you could be caught short.
That’s because a car limit applies to passenger vehicles, and the limit for the current (2020/21) income year is $59,1363.
Back to the family sedan, right?