Businesses today are facing many social and economic challenges.

As the county works through this unprecedented time, the government has announced a number of incentives available to business owners across the country. 

The first and most talked about incentive is the increased instant asset write-off, whereby under the new threshold, businesses can instantly write-off plant and equipment assets that valued up to $150,000. 

Some of the common assets that BMT Tax Depreciation has seen written off so far include medium-sized industrial machinery and other vehicles such as farming tractors and delivery trucks. 

How can businesses make the most out of the new instant asset write-off threshold? 

The increased threshold was introduced in March this year and has been extended until December.

It’s significantly higher than it was previously and is now available to the majority of Australian businesses. 

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Business owners need to be aware that both new and second-hand plant and equipment assets are eligible for the write-off.

The only requirements are that the asset is within the threshold and is purchased and installed between 12 March and 31 December 2020. 

This means if a business purchases a second-hand store in October 2020 that holds shelving with a depreciable value of $50,000, they can write it off.

Backing Business Investment Incentive

In addition to the instant asset write-off, the Backing Business Investment (BBI) incentive is available until 30 June 2021. 

The BBI accelerates depreciation deductions at a rate never been seen before.

The overarching aim of the BBI incentive is to support business growth and investment by allowing owners to claim more in the year the asset was purchased.

Asset eligibility under the BBI incentive is different to the instant asset write-off conditions.

There is no asset threshold limit to the BBI incentive, however it must be brand-new.  

How the BBI incentive works for different businesses

The way depreciation is accelerated under the BBI incentive changes based on the size of the business. 

Small businesses that are using the simplified depreciation rules can place an eligible asset in their general small business pool. Once allocated, they can deduct 57.5 per cent of the asset’s value in the first year by using the BBI incentive. In following years, the asset is depreciated in the pool. 

For larger businesses, the BBI works differently. The business can deduct 50 per cent of the asset’s value in the first financial year, in conjunction with the standard rate of depreciation on the remaining value. The asset is then depreciated as usual in following years. 

How businesses can take advantage of the incentives this financial year

A tax depreciation schedule prepared by a specialist quantity surveyor is the easiest way for business owners to take advantage of the incentives on offer. 

The schedule will include every depreciable asset available and applies all legislation to ensure claims are maximised and compliance is maintained. 

BMT Tax Depreciation has been the most trusted commercial depreciation specialist for over 20 years. To learn more about the commercial services BMT offer to business owners and investors, Request a Quote or call 1300 728 726. 

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