Instant Asset Write-Off – No Value Limit – Budget 2020

Instant Asset Write-Off  – No Value Limit – Budget 2020

Instant Asset Write Off Update – Budget 2020

Good Morning,

One of the biggest value items in the Government’s October Budget is the inclusion of an immediate tax deduction for the full value of most depreciable assets over the next two years. For businesses with under $50m in turnover this includes second-hand equipment purchased. This has now passed Parliament and is expected to receive Royal Ascent becoming fully operational.

The key points to note: 

  • Contract to purchase must be after 6 October 2020.
  • Delivered and in use by 30 June 2022.
  • Potential tax saving of between 26 and 30% on the value of the asset – this benefit applies in the 2021 or 2022 tax year when the tax return is submitted.
  • Can work in with the loss carry back rules.
  • Best examples of possible asset purchases that are eligible: large forklifts, cranes, trucks, excavators etc.
  • Like the $150,000 immediate asset write-off, this will not apply to vehicles over the luxury car tax limit of $59,136 unless they are commercial vehicles.
  • Excluded assets include: Buildings, capital works, horticultural plants, software and goodwill. Plus personal use assets of course.

As always, if you have any questions please contact us.

 Yours Sincerely,

Scotia Online CIBC Online