It’s good news for tradies – explaining the instant asset write-off and how it can benefit you and your business.

As part of the 2021-2022 Federal Budget, the Australian Government announced an increase in the instant asset write-off scheme. This removed the $150,000 per asset limit in response to the impact of the COVID-19 pandemic.

Originally scheduled to expire on 30 June 2022, the scheme has been extended to 30 June 2023 under the 2021 budget released in early May 2021. The announcement has been welcomed by new-car buyers and small business owners as stock shortages have dramatically delayed the delivery of orders.

To find out more about the instant asset write-off and how to make the most of it, we spoke to the team at Stratton Finance and Elinor Kasapidis, Senior Manager Tax Policy at CPA Australia.


How does the instant asset write-off work?

The instant asset write-off is like a supercharger for your depreciation, available for Australian businesses with a turnover of up to $5 billion. Put simply, it shortens the “normal” timeline an asset would be depreciated over, allowing you to realise the tax benefits faster.

What’s the best way to claim a vehicle if you are running your own business?

The first and most important thing to remember is; consult your accountant for financial advice relating to the instant asset write-off program. They know best!

Let’s say for example you ran a small carpentry business with a turnover of $600,000 per year who was wanting to upgrade your vehicle and working machinery. After searching for the right assets, you found a new ute with a tray (eg Nissan Navara SL 4×2 cab-chassis for $32,300) and used lathe machinery for $22,500. On the basis the assets are eligible, you would be claiming $54,800 as an immediate tax deduction for the financial year.

This means you offset $54,800 of your deduction and expense pool against your $600k income pool (you don’t get a $50-grand cheque from the government!)

The vehicle’s price includes stamp duty and other on-road costs and any single asset (including your vehicle) can not exceed $150,000 in value. Remember to check asset eligibility first, which can be found on the ATOs website.

How do accessories such as vehicle signage work and when does this all need to be accounted for?

If installed by the dealer at the time of purchase, accessories are included in the vehicle’s asset offset value. If you add say, a $2000 signage wrap to the Navara mentioned above, you can add that into your offset asset pool (on the basis the item hasn’t been allocated into a low-value asset pool), and may be eligible to claim this under the instant asset write-off. Under the 2021/22 Budget recently announced, temporary full expensing is now available for eligible assets first used or installed prior to 30 June 2023.

Is there a cap for under the instant asset write-off?

Under the FY20/21 year rules (for this year’s tax return), there is a cap on cars of $59,136. The differentiation between a car and a ‘load-carrying vehicle’ is a payload of 1000kg

This means you can add 100 per cent of your $32,300 Navara SL Cab Chassis to the asset pool (under the car cap and over the payload cap), as you could a $36,490 Nissan Juke Ti (under the car cap but under the payload cap).

However, if you glanced around that Nissan showroom and opted for something more expensive, like a $60,630 Navara Pro-4X automatic, which is over the car cap price but also over the payload cap (only just though, at 1004kg), you can claim the whole amount as it is considered to be a load-carrying vehicle.

Where the ‘arguably not as practical for work’ $193,800 GT-R Premium is under the payload but over the car price threshold, and can only have the first $59,136 claimed, leaving a balance of $134,664 to explain to your accountant.

What process of proof do you need?

Keeping a record of all purchases intended and claim for under the instant asset write off is critical, including when it was purchased, and the value paid.

Using the Nissan Navara above as an example, what’s the benefit for those purchasing the ute solely for work purposes? (100% business use with the base Nissan Navara as an example – $32,300 before on-roads for a single cab 4X2).

This will reduce their taxable income by $32,300 and the tax deduction will be $32,300 x their nominal tax rate.

How about the benefit of purchasing the ute not exclusively for work purposes? (70% business use, using the range-topping NavaraPro-4X as an example – $58,130 before on-road costs).

You would calculate as the price of the Pro-4X at $58,130 X (70% business use) will reduce their taxable income by $40,691 and the tax deduction will be $40,961 X their nominal tax rate.

Finally, what’s the best way to financially benefit your business?

Given there are record low-interest rates, and the opportunity to grow and build your business now is the time to consider what financial solutions may be available. Speak to a financial consultant or tax advisor for any advice or recommendation that specifically pertains to your business.


NOTE: Nothing in this article is implied as financial or tax advice. You should seek specific advice from your accountant to determine eligibility and applicability of your business and financial circumstances.

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