Tax Alert - Bill for Instant Asset Write-Off for $20,000 and Small Business Energy Benefits finally passes

Lowe Lippmann Chartered Accountants

The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 was finally passed by Parliament yesterday, with two key concessions, including:

The instant asset write-off threshold is $20,000, for assets first used or installed ready for use between 1 July 2023 and 30 June 2024.
The Small Business Energy Benefits bonus 20% deduction for eligible expenditure that supports electrification or more efficient energy use, incurred between 1 July 2023 and 30 June 2024.

Now that the Bill has been passed by both the House of Representatives and the Senate, it now simply waits to receive Royal assent.

Instant asset write-off threshold is $20,000

The instant asset write-off (IAWO) threshold is $20,000, for assets first used or installed ready for use between 1 July 2023 and 30 June 2024. This is down from the $30,000 threshold which was being debated in Parliament for the last three months.

It is important to note that the IAWO threshold of $20,000 applies only to small business entities (with aggregated turnover of less than $10 million).

There was a prolonged debate to include medium sized entities (with aggregated turnover of less than $50 million) ultimately not being agreed to or adopted.

Small Business Energy Benefits bonus 20% deduction

The Bill also included the Small Business Energy Benefits, which provide a bonus 20% deduction for eligible expenditure that supports electrification or more efficient energy use, incurred between 1 July 2023 and 30 June 2024. We note that this bonus 20% deduction is available for both small and medium businesses (with an aggregated annual turnover of less than $50 million).

Eligible depreciating assets (and improvements to depreciating assets) that support electrification or more efficient energy use will need to be first used or installed ready for use (or the improvement cost incurred) between 1 July 2023 and 30 June 2024.

Up to $100,000 of total expenditure will be eligible for the incentive, with the maximum bonus tax deduction being $20,000 per business. If the asset has a private use component, then a proportionate adjustment will need to be applied to claim the bonus 20% deduction.

Full details of this bonus 20% deduction has been explained in a previous Tax Alert – click here.

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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