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Instant Asset write off extended for small business

Khushroo Dastur • May 23, 2024

As part of the 2024 Federal Budget, the Federal government has announced a one year extension to the increase in the instant asset write-off threshold to $20,000.

With the temporary threshold increase announced (yet to be legislated) in the 2023 Federal Budget due to expire on 30 June 2024, this extension means small businesses can immediately deduct the cost of eligible assets in their 2024-25 income tax return.

Eligibility criteria

The following conditions must be satisfied in order to be eligible for the instant asset write-off:

- The asset must be first installed or ready to use between 1 July 2024 and 30 June 2025

- The asset must cost less than $20,000

- The annual aggregated turnover of the business must be less than $10 million.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

Assets valued over the threshold

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

Next steps

Small businesses can continue the approach from the previous income year and immediately deduct assets eligible for the instant asset write off.

The provisions that prevent small businesses from re-entering the simplified depreciation regime (lockout rules) for five years if they opt-out will continue to be suspended until 30 June 2025.

Please free to contact our office should you have any queries in relation to these announcements.

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Fringe Benefit Tax at Christmas Time

By Khushroo Dastur • January 15, 2023

It is a time of the year when giving is encouraged. As a business owner, you may want to make sure you have all the information available to you, so that you are fully aware of your tax obligations this Christmas. Christmas parties The cost of food and drink associated with a Christmas party is exempt from fringe benefits tax (FBT) if they are provided on a working day on your business premises and consumed by current employees. This exemption is only available for employees, not associates. The provision of a Christmas party held off your business premises may also be exempt from FBT under the minor benefits rule if the cost of the party is less than $300 per employee. The FBT exemption also applies to an associate of your employee, as long as the benefit remains under $300 per employee. Christmas gifts Under the minor benefits rule, providing a gift to an employee is also exempt from FBT as long as the value of the gift is less than $300 under the minor benefits rule. Tax deductibility of a Christmas party The cost of a Christmas party can only be claimed as a tax deduction if it is subject to FBT. Therefore, if your party is less than $300 per employee, then you cannot claim the cost as a tax deduction. Inviting clients or customers? Generally speaking, inviting clients or your customers to a Christmas party is not subject to FBT. However, as the Christmas party is considered to be providing entertainment, the cost of clients attending the party is not income tax deductible. Here's an Example You decide to hold a Christmas party for your 60 employees, along with 20 of the employees’ partners and 10 clients. The overall cost of the Christmas party totals $9,000 including gifts. The cost of the party is not subject to FBT as the cost is considered a minor benefit to your employees and their associates. Also, the cost associated with your clients attending does not attract FBT. The average cost of your employees and their associates is $100 per person, being under the FBT limit. As no FBT applies, this cost ($8,000) is not tax deductible. The $1,000 of cost allocated to clients is also not tax deductible as it is considered the provision of entertainment which is specifically denied as a deduction. Talk to us about your entertainment and gifting plans this Christmas. We can advise on the tax deductability or your obligations.