Changes to instant asset write off and accelerated motor vehicle depreciation

The Government has announced that, due to the abolition of the mining tax, certain tax concessions will also go along with it.

The one that will affect small businesses, those with an aggregated turnover (annual turnover from you, connected entities and affiliates) less than $2 million, is the scrapping of the instant asset write off and accelerated depreciation for motor vehicles.

From 1 July 2012, the instant asset write off meant assets costing less than $6,500 could be claimed outright. The accelerated depreciation was a $5,000 up front deduction of the cost of new motor vehicles with the remaining cost being depreciated.

What does this means for you?

You must act fast. These tax concessions are now only available on new plant and equipment and motor vehicles purchased and installed ready for use by 31 December 2013.

If you have not purchased any new assets this year, a Christmas splurge could provide additional tax savings for the 2014 financial year. The good news is the $6,500 is per asset, which means to be eligible each individual asset has to be less than $6,500.

There are also benefits for second element costs. These are costs that come after you already hold the asset and could include improving the asset or transporting it from another location. If a second element cost is less than $6,500 it is also eligible for the immediate write off. These amounts, however, do not have to be installed and ready for use by 31 December 2013, although the investment must have been made. For example you must hold an invoice prior to 31 December 2013 for the works.

Key Points:
1.  Small Business Entity
2.  Capital expenditure under $6,500
3.  Installed before 31 December 2013
4.  100% deductible this year

Please contact CNS Partners should you wish to discuss the above.