Changes To The IAWO Scheme Following The 2023-24 Federal Budget
The Instant Asset Write-Off (IAWO) and Temporary Full Expensing (TFE) Scheme tax deductions for depreciating assets may help free up cash flow for your business, which may then allow you to use those funds for business expansion or to invest in other areas of your business.
If your business is claiming tax deductions during the 2022-23 financial year, the below IAWO rules apply until 30 June 2023.
- The asset must be used, or installed ready for use, prior to 30 June 2023.
- There are no limitations on the quantity of the qualifying asset or the value of said asset.
- Deductions can only be claimed for the business portion of the asset (eg. motor vehicles).
- Both new and used assets can be eligible. However, it should be noted that for second-hand assets, the business aggregated turnover must be less than $50 million. For new assets, the business’s aggregated turnover must be under $5 billion.
When this scheme was extended during COVID, it was dubbed the Temporary Full Expensing (TFE) Scheme. The TFE Scheme will terminate on 30 June 2023.
Changes following the 2023-24 Federal Budget
As part of the 2023-24 Federal Budget, the Australian Government reintroduced the $20,000 IAWO to benefit small businesses. This means that if your business purchases an asset under the value of $20,000, the business may be eligible for an immediate deduction for the business portion of the asset. The Business’s aggregated turnover must be under $500 million to qualify under the new IAWO scheme.
- The asset must be first installed or installed and ready for use between 1 July 2023 and 30 June 2024.
- Deductions can be claimed for multiple assets if the cost for each asset falls under the $20,000 threshold.
- Both new and second-hand assets are eligible.
- Simplified depreciation rules need to be applied to the asset in order to put in a claim for the deductions
If you need further assistance, consult with a financial advisor or accountant to help you manage your finances better. Pacific Finance Australia can put you in touch with our network of experts in the field.
Contact your Pacific Finance Broker today on firstname.lastname@example.org or give us a call on 08 9321 2120.
DISCLAIMER: This information is for general information purposes only. The information contained herein does not constitute financial or professional advice or a recommendation. It has not been prepared with reference to your financial circumstances or business and should not be relied on as such. You should seek your own independent financial, legal and taxation advice as to whether or not this information is appropriate for you.