The Instant Asset Write-Off Has Been Extended, But There Are Still Good Reasons To Invest In Expensive Equipment Before 30 June 2023
Top quality equipment like the ultrasound and X-ray systems we provide at Radincon are great value, but they’re still major investments which you need to plan for. Tax incentives like the Instant Asset Write-Off can make that investment less of a strain on your pocket.
We sought advice from industry finance expert John Rowe of Veterinary Finance Australia, who has extensive long-term experience working with vet practices at every level of maturity. John has helped many of our customers finance purchases, so they keep more cash in the business and can grow faster. We love his strategic approach.
How Does The Instant Asset Write-Off Work?
Usually, when you buy capital assets, your accountant will depreciate them over the ATO-approved lifetime of the asset. In your accounts, you spread the cost over many years, and each year, you get a tax deduction based on a portion of the cost.
The Instant Asset Write-Off lets you depreciate the whole value of the asset in the first year. It was introduced in October 2020 to support businesses during COVID.
What does this mean for you and your practice? Quite simply, you pay less tax in the year that you buy the equipment. Every cent of the purchase prices comes straight off your tax bill and you get to keep that cash in your practice and use it for other purposes. That could be paying off loans faster, or you might want to invest in business areas such as marketing, staff or training.
An additional benefit is that it makes depreciation compliance far less complex, for you, your accountant or your bookkeeper.
If you’re looking to upgrade or add to your imaging capability, this was made for you. The best and latest equipment will not only give you productivity gains, it’s a powerful way to retain and attract members of your team.
What Are The Eligibility Criteria For The Instant Asset Write-Off?
The Instant Asset Write-Off was due to expire at midnight on 30 June 2023, but the Federal Budget delivered on May 9, 2023 has extended that till the same time in 2024. There are however a few changes – notably the introduction of a $20,000 limit on the value of any individual piece of equipment.
Here’s a comparison with the differences shown in red.
Capital equipment (assets) which you purchase and install before 30 June 2023.
- The goods can be new or second-hand
- There is no upper limit on the value of the goods bought
- You can buy from a supplier or make a private purchase
- Payment can be either cash or via a finance agreement
- Your tax write-off will apply to the 2022-2023 tax year
- Available for businesses with an aggregated turnover of less than $5 billion
Capital equipment (assets) which you purchase and install between 1 July 2023 and 30 June 2024.
- The goods can be new or second-hand
- There is an upper limit or $20,000 per asset on the value of the goods bought
- You can buy from a supplier or make a private purchase
- Payment can be either cash or via a finance agreement
- Your tax write-off will apply to the 2023-2024 tax year
- Available for businesses with turnover of less than $10 million (grouping may apply)
From 1 July 2024 onwards, the current expectation is that we will revert to traditional depreciation methods, with instant asset write-off only applicable to assets (equipment) worth less than $1000.
Could your practice benefit from new equipment? Should you leverage the Instant Asset Write-Off and financing to support cashflow? Now’s the time to find out. Here’s what you’ll need to do:
- Talk to the Radincon team (1300 721 734 / radsales@radincon.com.au) for help selecting the best ultrasound and X-ray equipment for your practice.
- Talk to John Rowe (0414 187 728 / finance@vetfinance.com.au) to explore financing options.
- Talk to your accountant or tax advisor to get information and advice specific to your practice and your situation.