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Re: The Coronavirus Stimulus Package

Newbie

Views 5274

Replies 4

Hi,

 

In relation to the newly unveiled stimulus package I would appreciate clarification in regards to the accelerated depreciation intended to be available to businesses with turnover less than $500 million.

 

It is noted that businesses with less than $500 million will be able to deduct an additional 50% of the asset cost in the year of purchase and is available for 15 months until 30th June 2021. However, it also mentions that business's with turnover under $500 million will be able to make an instant asset write off of upto $150,000 until the 30th June 2020.

 

If the asset costing upto $150,000 can be instantly written off in the 2020FY why would an additional 50% deduction be taken into consideration in the 2020FY?

 

I reckon I'm missing something here, could this matter be clarified?

 

Thanks in advance!

1 ACCEPTED SOLUTION

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Most helpful response

Devotee

Replies 0

As the information came as an announcement, rather than legislation, there is no definite answer to your question.

 

However, this fact sheet from the Treasury website indicates that the 50% deduction is merely bringing forward depreciation deduction amounts from later years to the current year i.e. it is not an additional deduction amount (see examples 3 and 4). 

 

This would mean that if an asset qualified for an instant write off you would claim an up front deduction for the cost of the asset (not 150% of the cost).  If an asset was not eligible for instant write off, you would then see if it was eligible for the 50% up front write off, with the remaining 50% of depreciation claimed over a number of years.

4 REPLIES 4

Most helpful response

Devotee

Replies 0

As the information came as an announcement, rather than legislation, there is no definite answer to your question.

 

However, this fact sheet from the Treasury website indicates that the 50% deduction is merely bringing forward depreciation deduction amounts from later years to the current year i.e. it is not an additional deduction amount (see examples 3 and 4). 

 

This would mean that if an asset qualified for an instant write off you would claim an up front deduction for the cost of the asset (not 150% of the cost).  If an asset was not eligible for instant write off, you would then see if it was eligible for the 50% up front write off, with the remaining 50% of depreciation claimed over a number of years.

Community Manager

Replies 0

Hi @C_Bel,

 

@Glenn4802 is right and the link they've provided has all the most current information. The stimulus package is being discussed in Parliament and could undergo changes before it becomes law. As soon as it passes we will update our website to provide further information.

 

For more information about how we're helping with this situation have a look at ato.gov.au/coronavirus

 

Thanks, NateH

 

ATO Certified Response

Community Moderator

Replies 0

Hi @C_Bel 

 

Thanks to @Glenn4802 for the great information you have provided.

 

Now that the laws have passed we have updated the eligibility criteria on accelerated depreciation and instant asset write off for eligible business.

 

For each new asset, the accelerated depreciation deduction applies in the income year that the asset is first used or installed ready for use for a taxable purpose. The usual depreciating asset arrangements apply in the subsequent income years that the asset is held.

 

The instant asset write-off threshold has increased to $150,000.  Check your business's eligibility and ensure you apply the correct threshold amount.

 

Check here for any changes to the Governments economic response to COVID-19 (novel coronavirus) as we will keep the information up to date.

 

KylieS

 

 

Enthusiast

Replies 0

The answer in simple English is that you may have assets over $150k, or assets not eligible for the instant asset write off.  Then you could use accelerated depreciation.  IF you choose too.  (You may not want to depreciate 50%+ in the first year if you don't need that much deduction in that year, meaning some of the deduction could be wasted and be better off spread over a number of years.)