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What is Instant Asset Write-Off?
Fiona McKinlay • Dec 20, 2018
Instant Asset Write-Off sounds like something you do when you loan something to that untrustworthy friend against your best judgment.
Instant Asset Write-Off sounds like something you do when you loan something to that untrustworthy friend against your best judgment.
You leant him your DVD of “Grease”? Well, that’s an Instant Asset Write-Off…you’re not getting that back.
While that is what it could mean, that’s not what the Australian Taxation Office thinks it means.
The nuts and bolts of what it means is an asset that uses simplified deprecation rules. This means that is the asset costs less than then the instant asset write-off threshold then instead of being added your asset register with a long-term depreciation value, they are written off the year they are bought. This can be a first- or second-hand item.
When instant asset write-off was first brought in by the ATO the threshold was $1000, however, today as of this writing the threshold is $20,000 inclusive of GST. That is assuming that you are not registered for the GST.
If you are registered for the GST, the current threshold is $20,000 exclusive of GST. Simply put it’s because you already claimed a credit the GST you paid on the activity statement and the ATO doesn’t like people that double dip.
If the asset is 100 per cent used for the business, this next part is going to be simple. However, if some of the asset is used for personal use then you must subtract a portion you would deem acceptable for that personal use.
What’s left is considered the taxable purpose proportion and is deductible. You will only have to do this if the total cost of the asset is under the threshold.
Sounds pretty straight forward?
We think so as well.
However, there is one more little bit to remember. If you later sell the asset that you claimed as a instant asset write off you will need to include the taxable purpose proportion amount you were paid for in your assessable income for that financial year.
There are plenty of fun things like this when it comes your business finance, if it’s not the type of thing that you want to think about then you can put
Balanced Bookkeeping and Business Solutions behind the finance steering wheel and we’ll get you to where you need to be just like we have done for hundreds of other Sunshine Coast businesses.
Sunshine Coast Bookkeeping Services – Xero, Myob, BAS Agents
And then there are employee payment summaries and the summary of income and expenses in a profit and loss statement, the record of debtors and creditors, asset purchases and expenditure on improvements, depreciation expense claims and capital gains tax, income tax returns and yearly reports, returns for PAYG withholding, fringe benefits tax (FBT), Goods and Services Tax (GST), and the taxable payments reporting system, meeting superannuation requirements… the list goes on and on.
With so many great software options including XERO, MYOB and Reckon. It’s vital for Balanced Bookkeeping and Business Solutions to be on top of them all. Our expert team can help tailor fit any software your business needs. We proudly keep the Sunshine Coast on top of their accounts. Ask us how we can help you today.
Balanced Bookkeeping and Business Solutions is a local Sunshine Coast company that provides a complete bookkeeping service and solutions for small to medium businesses and can cope easily with both the ATO and ACNC, so that you can pursue the far more rewarding and philanthropic business of fund-raising and distributing to the deserving foundation or trust of your choice.
Balanced Bookkeeping and Business Solutions is a local, Sunshine Coast business that provides a complete bookkeeping service and solutions for small to medium businesses. The principal of Balanced Bookkeeping and Business Solutions has worked in the accounting industry for over 20 years and is a qualified accountant and registered BAS agent, which means that you can discuss the pros and cons of casual and full time and part time employment, knowing that you will receive practical, constructive, valuable advice.
So, what is Fringe Benefits Tax? Simply put, it’s an extra tax that you cover for your employee that is for the benefit of the employee in lieu of paying them more money. The tax is calculated on the value of what is being used for FBT.
This is only a new initiative as we mention that came into effect as of the 1st of July 2018, so there are still a lot of questions to be answered. This is why a number of clients we serve on the Sunshine Coast have been coming to us at Balanced Bookkeeping and Business Solutions to see their options.
