How much can you claim under the Small Business Instant Asset Write-Off?
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This question took me as one that many of our readers may be interested in, so I thought I should share it – and its answer from John Kelly, Editor-in-Chief, Small Tax Handbook.
So here goes:
My understanding is that capital expenditure below $1000 is immediately deductible. I have heard reports that this limit was recently raised to $5000. Can you confirm whether this is the case?
Existing capital allowance arrangements for SMEs allow 'low cost assets' to be claimed as an immediate deduction in the year the business first started to use the asset or installed it ready for use.
A 'low cost asset' is an asset (except a horticultural plant) which has a cost of less than $1,000 at the end of the income year in which the asset started to be used – or was installed ready for use – for a taxable purpose.
This immediate deduction is commonly called the 'Small Business Instant Asset Write-Off'.
On 2 May 2010, the Government announced amendments to increase the Small Business Instant Asset Write-Off threshold to $5,000, starting from 1 July 2012.
On 10 July 2011, the Government further announced that the small business instant asset write-off threshold would increase from $5,000 to $6,500 as part of the Clean Energy Future Plan.
The start date for these changes remains 1 July 2012.
Source: by John Kelly, Small Tax handbook