---
title: How to make the increased write-off scheme work for you
description: Learn how to make the increased write-off scheme work for you
---

[Business Blogs & Finance Tips | Ausloans Finance ](https://www.ausloans.com.au/blog)

# [How to make the increased write-off scheme work for you](https://www.ausloans.com.au/blog/how-to-make-the-increased-write-off-scheme-work-for-you)

 Written by [Rodney Michail](https://www.ausloans.com.au/blog/author/rodney-michail) | Apr 9, 2020 2:36:48 AM

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### **What has the asset write-off threshold been increased ****to?**  

Last week the Morrison Government announced that they would increase the threshold of the current asset write-off scheme from $30,000 to $150,000 for all businesses with an aggregated annual turnover of less than $150 million until June 2020. After that the threshold will revert to $,1000 — a level we haven’t seen since 2015. 

Remaining cash-flow positive is of primary concern for any business large or small. Essential purchases and investment in any business is an important factor in the day-to-day operation and can be difficult, especially when money is tight. Now that the threshold has been lifted to $150,000 for instant tax writ-off's this should help make the decision to invest that much easier. 

### **I’m a sole trader, am I eligible?** 

A sole trader is the simplest form of a business and therefore eligible to the asset write-off scheme — the main difference in distinction is as a sole trader you are legally responsible for all aspects of the business, including debt pay off and taxes. 

### **So, what qualifies as the new instant tax write-off?** 

As of the 12 March 2020 business (including sole traders) can write off the tax from purchases up to the value of $150,000, as part of their tax claim. All eligible purchases that where made from 12 March 2020 till 30 June 2020 and are valued below the $150,000 will qualify under the new threshold.  

Assets bought in the tax year before 11 March 2020 will still qualify for an instant tax write-off of $30,000. Remembering the instant tax write-off threshold is due to revert to $1000 for small businesses (turnover less than $10 million) from 1 July 2020. 

Any single asset purchased under $150,000 from the 12 March, or $30,000 before 12 March, qualifies for the asset tax write-off. This means that if a business purchases multiple assets under these amounts, they should all qualify – even if the cumulative cost exceeds $150,000/$30,000. The cost of the asset includes both the amount you paid for it and any additional amount spent on transporting the asset, improving it or installing it for use. 

### **What can I write off?** 

In order to be eligible to write of tax on purchases under the new threshold, assets need to qualify: 

- Entire cost of the asset must be less than $150,000 (from 12 March 2020) or $30,000
- (before 12 March 2020), not just the business-use portion and inclusive of GST 
- Asset can be new or used 
- Asset purchased was first used or installed and ready to use in the income year you're claiming it in 

If you purchase an asset that is valued more than the $150,000 threshold then you can pool the business portion of the asset and claim a 15% deduction in the year you start to use the asset or a 30% deduction after the first year. 

So, if you decide it’s time to upgrade your Ute to a newer version or invest in new heavy plant equipment then as long as each asset is valued under $150,000 you can instantly write the tax off this financial year. Provided you purchased your new Ute or heavy plant hire — or both, between the dates of 12 March and 30 June 2020. 

[Read the ATO’s link](https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/In-detail/Depreciating-assets/Simplified-depreciation---rules-and-calculations/?page=5) on what it means to business pool and depreciate assets costing more than the threshold. 

### **What if I trade an asset to buy a new one, am I still eligible?** 

Yes, you are still eligible for the asset write off, however, there are some criteria you need to satisfy. 

### **Purchases made from 12 March 2020** 

If you're trading in an asset and the process appears as two transactions – e.g. you purchase a new Ute for business purposes and trade in your existing vehicle, then the cost of the new vehicle will need to be below the $150,000 threshold in order to qualify for the instant tax write-off. This is irrespective of the money made from selling the original asset. So, if your new vehicle, or plant machinery, is $180,000 but you made $35,000 selling your previous vehicle, even though the transaction cost a total of $145,000, you would still have to add the new purchase of $180,000 to your small business pool. 

### **Purchases made before 12 March 2020** 

The same process applies to the lower threshold. So, if you purchases new equipment before 11 March 2020 and it came to $35,000, but you made $7,000 selling your old equipment - even though you were actually only $28,000 out of pocket (below the threshold) - you would still have to add the new purchase to your small business pool. 

Here are some links for further reading: 

[https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/](https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/)

 

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