The recent budget announcements have seen the Instant Asset Write-Off Scheme tweaked and extended until 30th June 2022.
This scheme allows small businesses to claim immediate deductions on purchased assets, with no limit, each financial year (previously capped at $150,000 annually). Given the coronavirus pandemic, the rules around small business have shifted, and the write-off scheme means any business with an annual turnover of less than $5 billion is eligible. Yep, $5 billion.
Assets include new vehicles, tools, office equipment and the cost of improvements to existing equipment. These assets must be used (or installed for use) in the same year of your claim. The scheme can also be used on second-hand assets for businesses with a turnover of less than $50 million annually.
If you buy an asset for your business that you also use personally, you can only write-off the percentage it is used for business purposes.
For example, if you spend $50,000 on a car that you use 70% of the time for your business and 30% of the time personally, you’re able to write off $35,000.
While the instant asset write-off scheme extension has been welcomed by small business owners, it’s important to know that if you utilise the scheme, with some banks and other lenders, it may affect your ability to borrow for home or personal loans.
All banks and lenders have varied policies on how they see income and how you’re assessed for affordability. With over 100 years combined experience, our team understand the requirements of each lender. We are able to assess each individuals’ circumstances and offer sound advice to ensure your decisions won’t negatively impact your borrowing capacity in the future, while still seeing your business flourish.