How the Instant Asset Tax Write-Off Could Benefit Your Retail Business

Understand the new instant asset tax write-off opportunities.

(Article published: 10th April 2019 - following the Australian Government 2019 Budget announcement on 2nd April 2019)

As we come into the EOFY period, there's a lot of admin to keep you busy including accounting procedures and stocktakes. But, it’s also an important time to decide whether or not to take advantage of the Government’s instant tax write-off before the end of the financial year.

What is the Instant Asset Tax Write-Off Scheme?

The Instant Asset Tax Write-Off scheme allows eligible Australian businesses to purchase assets and get an immediate tax deduction, rather than having to write them down over the following years.

On 2nd April 2019, the Australian Government Budget announced:

  • The eligible business turnover threshold for accessing the write-off has been raised from $10 million to $50 million.
  • The amount that can be written off is now increased up to a total of $30,000 per asset (it can be used multiple times for multiple assets).

The latest announced changes are a big win for businesses. Over 370,000 businesses have already made claims. The Government says 3.4 million would now eligible for the write-off now that the turnover threshold has been expanded. What are the changes in this new scheme? There have been several changes to the amount that can be claimed over the space of the financial year. The latest amendments mean there are now three tiers for the 2019 income year:

  • Tier 1: $20,000 threshold for depreciable assets acquired before 29 January 2019
  • Tier 2: $25,000 threshold for assets acquired between 29 January 2019 and 2 April 2019
  • Tier 3: $30,000 threshold for assets acquired between 2 April and before 1 July 2020

Eligible assets can represent a wide range of ‘items’. POS Systems and eCommerce software can be eligible if they are in use, or installed and ready to use, in the current financial year. There are a number of rules and exclusions that you need to be aware of and so it is essential seek the advice of a taxation professional.

What are the opportunities for Australian retailers?

However, there are some clear new opportunities for eligible Australian retailers:

  • For retailers with an aggregated turnover of less than $10 million, there is the opportunity of an increased allowance for you to invest in new assets before 30th June 2019, given the eligible amount is now $30k.
  • For retailers with an aggregated of $10 to $50 million, this is a new opportunity that didn’t exist prior to the Australian Government Budget Announcement. Businesses in this category can now write-off up to $30k before the end of 30th June 2019.

‘In-use’ or ‘installed ready to use’ means act fast for claims before June 30th!

Retail Express’ cloud POS System and/or Shopify eCommerce software can drive faster growth across online and physical channels, and are eligible under the instant tax write-off scheme. This means you should invest in these systems before June 30th 2019 to claim an instant tax deduction in the current financial year.

Important: As mentioned above, there is a need to demonstrate any claimed assets are ‘in-use’ or ‘installed ready to use’ by June 30th for them to be eligible for the write-off in the 2019 financial year. With our expert implementation approach, we are able to install within the required time-frames for those retailers who enquire soon. However, it is essential that you seek the advice of taxation professional if you are looking to take advantage of the instant asset tax write off. This article is general in nature and should not be taken as financial or taxation advice for your specific business.

Sources:

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