Instant Asset Q & A
May 29, 2019
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Q: What is the instant asset write-off?
A: The instant asset write-off is a tax incentive which allows small businesses to deduct the full cost of certain business assets instead of depreciating them over time.
Q: What businesses are eligible for the instant asset write-off?
A: To be eligible for the instant asset write-off, you need to be carrying on a business with a turnover of under $50 million.
Q: Are cars eligible for the instant asset write-off?
A: Yes, provided that that car is used for a business purpose, it would be eligible for the instant asset write-off.
Q: How much can I deduct under the instant asset write-off?
A: To be eligible for the instant asset write-off, an asset needs to cost less than $30,000.
Q: Is the threshold GST inclusive or exclusive?
A: This will depend on whether or not you are registered for GST.
Q: If you are not registered for GST, the threshold is inclusive of GST.
A: If you are registered for GST, the threshold is exclusive of GST. That means that for a car that has a sale price of $31,900 (cost of $29,000 plus GST of $2,900) it would qualify for the write-off if the purchaser is registered for GST but would not qualify for the write-off if the purchaser is not registered for GST.
Q: Can I claim the full GST credits if I also claim the instant asset write-off?
A: Yes. If you are registered for GST, you can still claim the full GST credits even if you claim the instant asset write-off.
Q: How do discounts impact the eligibility for the instant asset write-off?
A: The relevant cost is the amount that you have paid. Therefore, if you have paid under $30,000 because of a discount, the car should be eligible for the instant asset write-off.
Q: Does the $30,000 threshhold include costs such as stamp duty, CTP, registration, optional extras?
A: The $30,000 would include stamp duty but not costs such as CTP and registration. Extras that are fitted to the car would typically be included in the cost of the car while extras such as extended warranty would not.
Q: What if I trade in a car?
A: The cost of the car that is being purchased must be under $30,000. Therefore, a car that costs $35,000 would not be eligible even if you only pay $25,000 because you trade in a car worth $10,000.
Q: What if I buy multiple cars?
A: Each car is a separate asset so provided that each car is under the $30,000 threshhold, each car should be eligible for the deduction.
Q: If I buy a vehicle that is over $30,000, can I still get a deduction for the cost up to $30,000?
A: No, if the vehicle is over the $30,000 threshhold, you cannot claim an outright deduction for any part of it. You may instead be able to depreciate the cost over the life of the asset (usually 8 years for passenger cars and 7.5 years for light commercial vehicles).
Q: Am I eligible for the instant asset write-off, I am an employee that uses my car entirely for work?
A: No. Only businesses are eligible for the instant asset write-off. You are not entitled to the write-off if you are an employee even if the vehicle is only used for work purposes.
Also, click here for our sister dealership in Croydon Sydney, LDV Five Dock.
Disclaimer – the above comments are general in nature. All customers should seek independent tax advice to confirm their eligibility for the instant asset write-off.
