Everything you need to know about the SME instant asset tax write-off

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The Treasurer has extended the $150,000 instant asset tax write-off scheme by six months to help businesses invest in equipment and improve cash flow. Here's what you need to know about this program and how it can benefit your business as well as your clients'.

What is the SME instant asset tax write-off (IATWO)?

The IATWO program enables small-business owners to claim certain deductions almost immediately off their business costs and associated tax obligations. For purposes of the program, a small business is one whose annual aggregated turnover is under $500 million, according to the Australian government.

The specific expenses that your clients can claim are equipment, or assets, used for business-related purposes. Examples may include motor vehicles, tools, machinery and office technology like printers or copiers.

The IATWO has proven highly popular with the small-business owner community, which is part of the reason why it's been regularly renewed since it was first introduced and expanded so more companies can take advantage.

What are the latest updates to the instant asset write-off?

The changes continue in 2020. the Australian Government raised the threshold to $150,000 due to the COVID-19 crisis and have now extended the program for another six months. They also expanded the definition of small business. As previously referenced, access is confined to companies whose aggregated annual turnover is less than $500 million, but the previous cap was 10 times less than that at $50 million.

How does the IATWO benefit you and your clients?

It encourages small-business owners to further invest in their company by supplying them with more spending power and overall cash flow. The tax-saving advantages available to your clients can ultimately help improve your earning power by virtue of new or returning clientele seeking out asset financing through you.

How is eligibility determined?

There are a few other aspects to eligibility beyond aggregated annual turnover (less than $500 million) and asset valuation ($150,000 or less). Like when the asset was purchased and/or put to use.

You may still be eligible for the program if the purchase or usage date doesn't fall within the window, but at a different threshold and aggregated turnover. Visit the Australian Taxation Office website for more details and examples. You may also want to advise with a tax consultant.

The eligibility deadline for the latest updates to the IATWO is fast approaching. Now's the time to let your clients know about it, check out our marketing templates HERE.

Interested in hearing more about assisting your clients with asset finance? Reach out to the Connective team today.