Ready to put the wheels in motion for your business growth and want to take advantage of the Instant Asset Write Off 2020 scheme?
There’s some great news for small and medium businesses wanting to upgrade their motor vehicle fleet before the end of this financial year. As part of the 2020 stimulus package, the Federal Government has expanded its small business asset write off scheme first introduced in the 2015/2016 financial year. Also known as simplified depreciation, businesses could instantly write off eligible purchases up to the threshold limits in the year purchased and delivered rather than depreciating them over time.
Before the temporary changes were put into place, writing off vehicle purchase for business under the small business asset write off scheme had a maximum upper limit of $30,000, which was scheduled to revert to $1,000 on the 1 July 2020. So, what’s changed?
The instant asset write off 2020 changes have temporarily increased this threshold to $150,000 per eligible asset and expanded the turnover eligibility to businesses with aggregated turnovers of up to $500 million. With this temporary increase, upgrading your fleet or purchasing new motor vehicles could significantly reduce your business’ tax liability for this financial year.
How Can eCarz Help Your Business
At eCarz, we are car brokers and asset finance specialists. We buy, sell & finance all types of cars for business and personal use. With over 100 years of combined motor industry experience, our team has the relationships, knowledge, and negotiation skills needed to get you the best deals from our extensive dealership network on practically any vehicle on the road.
When you’re looking for a fast-turnaround to take advantage of the instant asset write offs before the end of this financial year, our professional car buying service will do the research and price negotiating for you, saving you not only time and money but the hassle too.
Get in touch with our dedicated team today and we’ll help your business with its fleet requirements before the end of this financial year.
Instant Asset Write Off 2020 Scheme – Eligibility Rules
Is My Business Eligible?
To be eligible for the small business asset write off 2020 scheme you must:
- Have an aggregated turnover of less than $500 million (reverting back to $10 million on 1 July 2020).
- Purchase and have your motor vehicles ‘ready-for-use’ in your business before 1 July 2020.
- Ensure the cost of each vehicle is less than the applicable threshold.
- For passenger vehicles, there is a cost-limit of $57,581.
- For vehicles designed not to carry passengers (can carry a load of over 1 tonne), the full $150,000 upper limit will apply.
2020 Stimulus Package FAQ
Are both new and used vehicles eligible?
No, eligible motor vehicles purchased under the scheme can be new or used as long as they are purchased and ‘ready for use’ before 1 July 2020.
What types of motor vehicles are eligible?
All motor vehicles are eligible for the instant asset tax writes off; However, threshold limits will apply for passenger and non-passenger work vehicles.
Can I write off a passenger vehicle?
Yes, passenger vehicles can be written off under this scheme. However, there is a maximum car limit of $57,581 per passenger vehicle. In addition to this limit, rules for business and personal use vehicles as above still apply.
A passenger vehicle purchased for $100,000 that is used 100% business purposes.
As your passenger vehicle is used 100% for business purposes you are eligible to instantly write off the full amount up to the car limit of $57,581 this financial year. The balance of $42,419 would no longer be eligible for further depreciation.
Can I write off multiple vehicles?
Yes, under the scheme, there is maximum limit on the number of motor vehicles that can be written off and the $150,000 threshold applies to each eligible vehicle ($57,581 for passenger vehicles).
When is the deadline for the instant asset write off?
The temporary increase to $150,000 and turnover eligibility for businesses will revert to $1,000 on 1July 2020. To take full advantage of these write offs, your vehicles must be ready-for-use by this time.
How is the cost of my motor vehicle calculated?
The cost basis of your motor vehicle for simplified depreciation will be the cost of the vehicle plus any amounts you spent transporting it ready for use. Some of which could include relevant taxes, brokers fees, and delivery charges.
Note that GST is only added to the cost basis of a vehicle if the business is not registered for GST. If a business is registered for GST, the GST portion is not added to the vehicle cost basis.
How does trade-in value affect my car’s cost basis?
Typically, the trade-in value will reduce the net cost of the asset, however, the full amount can still be written off. Please get in touch with our team for further details.
How does writing off vehicle purchase for business and personal use work?
When writing off vehicle purchase for business and personal use under the instant asset write off 2020 scheme, businesses need to follow ATO guidelines. As a general rule, the amount you are eligible to write off is determined by estimating how much of the asset is used for personal use and business use.
For example, if you purchase a new Ute for your landscaping company that costs $40,000, but it is 50% for personal use and 50% for business use, the maximum write off would be $20,000.
It’s important to note that rules for shared business and private use vehicles apply to both passenger and non-passenger vehicles (with a load carry capacity of over 1 tonne).
For the best deals on fleet pricing and to take advantage of the small business asset write off 2020, get in touch with the dedicated car brokers at eCarz today, especially if you have any further instant asset write off 2020 related questions.
***Please note that the information provided in this article has been provided for information purposes only and is accurate to the best of our knowledge. We encourage you to speak to a small business tax accountant before acting upon any of the information contained herein. The eCarz group of companies does not accept any responsibility for loss to any person as a result of action taken or refrained from in regard to the contents of this publication.