Instant Asset Write Off

How to use the Instant Asset Write Off Scheme in 2021

What is the Instant Asset Write Off (IAWO) Scheme?

The IAWO Scheme enables businesses to write off the entire amount of an asset, thus allowing businesses to claim an immediate deduction in the same financial year that the assets were purchased. Several changes have been made to the scheme since its inception in 2011.

Changes made to the IAWO Scheme since the 2020-21 Federal Budget

  • The $150,000 cap for each asset has been removed. There are no limitations on the value of newly purchased assets.
  • The Scheme which was originally in effect until June 2022. It has now been extended to June 2023. This gives businesses more time to upgrade their equipment and claim the relevant deductions.
  • Previously businesses with an aggregated turnover of less than $500 million were eligible. Now businesses with an aggregated turnover of up to $5 billion can apply under the new scheme. *
  • The new assets must be installed and ready for use between 7:30 pm AWST on 6 October 2020 and 30 June 2023.
  • You may be able to secure finance to purchase the asset and still claim a deduction for the cost of the asset if eligible.

Purchasing used/second-hand assets via the IAWO Scheme

  • Depreciable assets acquired after 7:30 pm AWST 6 October 2020 are eligible. However, installation or use of the asset must happen by 30 June 2023.
  • Businesses that are purchasing second-hand equipment must have an aggregated turnover under $50 million. *
  • Businesses with aggregated turnovers between $50-$500 million can claim a full deduction for second-hand assets. In saying that, the value of each asset cannot exceed $150,000. However, purchases  must occur prior to 31 December 2020 and be installed and ready for use by 30 June 2023.

*Aggregated turnover

The business’ annual turnover plus the annual turnover of any businesses or entities that are connected or affiliated with the business. Affiliated businesses may be based in Australia or overseas.

Other factors to be considered when purchasing via the IAWO Scheme

  • Tax deductions must be claimed in the same financial year that the asset was installed and/or used
  • Claims can only be made for the portion used for business purposes. If the asset is purchased for both personal use (50%) and for business use (50%), the business will only be able to claim 50% of the value.
  • There are no limitations on how many assets can be purchased.
  • We recommend that you speak with your Accountant before acquiring assets via the IAWO Scheme.

Please note: The above information is accurate as at May 2021. Please speak with your Pacific Finance Broker to find out if the conditions for this scheme have changed since.

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