The $20,000 write-off announced in the May Federal Budget, allows small businesses (those with an annual aggregated turnover of less than $2 million, including sole traders) to claim an immediate deduction in the year that the asset is first used or installed ready for use in their business.
If your business is GST-registered, the write-off threshold is the GST exclusive cost of the asset. The threshold is applied on an asset-by-asset basis. Even where the assets purchased are identical or form part of a set, each is entitled to its own $20,000 threshold.
DOES FBT LIABILITY HAVE ANY IMPACT ON THE TAXABLE PURPOSE PROPORTION?
Use the following table to assess the FBT impact:
|ASSET SUBJECT TO FBT?||TAXABLE PURPOSE PROPORTION IS…|
|No||Based on business usage|
Fred’s Panel Beating Pty Ltd acquires a ute for $15,000 (+$1,500 GST). The ute is used by Fred who maintains a log-book showing 60% business use. The private use will be dealt with as a motor vehicle fringe benefit under the FBT rules. Because the ute attracts FBT, the taxable purpose proportion is deemed to be 100%. As the cost is $15,000, the asset is eligible for the write-off. The amount of the write-off is $15,000, despite only 60% business use.
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