The Government Instant Asset Write-Off – What Is It and Should You Use It?

The Australian Government has announced that it will extend the $150,000 instant asset write-off for a further six months, to 31 December 2020. The purpose of this initiative is to stimulate the economy by encouraging businesses to invest where they may have previously been more cautious.

Basically, the government is trying to reinvigorate the economy by making business leaders and owners more confident.

Businesses with a turnover of less than $500 million will be able to invest in, and instantly write-off, multiple assets, but each asset must cost less than $150,000.

But what does this practically mean for you?

Firstly, talk to an accountant before buying anything. This is not only to determine eligibility but also suitability. Just because there is an offer available, doesn’t mean it is a good business decision. Any purchase you make should enhance your business and not put it under any unnecessary stress.

This is especially important in our industry, where we provide an oasis of calm and luxury separate from the outside world. If you are stressed about the purchase of a new piece of equipment – regardless of the tax advantages – your staff will feel it too, and that will trickle down to your clients.

But, in saying that, this is a unique opportunity.

Rather than depreciating an asset, the Instant Asset Write-Off lets you claim it in your tax return for that financial year, as long as it is installed and ready for use. Also, the deduction applies to both new and second-hand devices, so you can potentially upgrade your laser hair removal device to a Candela GentleMAX Pro, which is far more efficient, meaning you can perform more treatments and increase average profitability.

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Essentially, the opportunity for clinic owners is the ability to expand with immediate tax benefits. So, if expansion is part of your medium-term business plan, and if your accountant agrees, you may wish to consider bringing your investments forward.

To check your eligibility go to https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simpler-depreciation-for-small-business/Instant-asset-write-off/

 

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