Don’t let this asset tax trap trip you up

Businesses have been urged to double-check they are up to speed on the changes to the instant asset write-off rules before the end of this financial year.

Chris Smith is a Director at Brentnalls WA, an accounting and advisory firm.

He says there are a range of COVID-19 stimulus measures that affect businesses filing for FY19-20.

“Probably the most relevant of those for SMEs would be the immediate write-off of depreciable assets,” he said.

The write-off was previously limited to assets of $30,000 or less. That limit has been extended to $150,000 for this financial year, as part of stimulus measures aimed at countering the COVID-19 downturn.

Mr Smith said it’s critical to understand that you can’t claim the write-off if you have simply purchased the asset by June 30 – it needs to be ready for use.

“One thing to bear in mind, and it’s one of the risk areas to be aware of, is it does need to be installed and ready for use by June 30,” he said.

Mr Smith also urged SMEs to continue to review their eligibility for the $1500 fortnightly JobKeeper wage subsidy payments.

He said it was also important to keep on top of JobKeeper monthly reporting requirements, even if turnover increased as restaurants, cafes, gyms and other service industries resumed trading.

He added that businesses with staff whose wages had been “topped up” to meet the $1500 payment did not need to pay superannuation on the additional wage.

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