ATO provides asset write off guidance

The immediate deductibility for assets worth less than $20,000 was one of the Federal Budget's highlights for small businesses, providing a relief for compliance and tax procedures. 

However, although the changes have been announced, they still have not come into effect, giving businesses plenty of time to formulate a considered response once they go live. In preparation, the Australian Tax Office (ATO) has released guidelines for small businesses looking to make use of the new regulations. 

What does the ATO advise?

The first piece of advice is that there is no need for companies to hold off purchasing new assets until the changes go live. Any assets worth less than $20,000 can be backdated, meaning as long as they were acquired after 7:30​pm (AEST) on May 12 2015 they can still be included in the scheme. 

The ATO stresses the need for small businesses to keep accurate and detailed records of all purchases as it will be investigating deduction proposals. 

"The ATO will be working with small businesses looking to use the immediate deduction to ensure they are appropriately claiming it," said Deputy Commissioner Steve Vesperman.

"We will be monitoring claims of this nature and following up on high risk cases."

It's also important to note that assets coming in over the $20,000 threshold will need to be pooled and then deducted as per the old process. This will see them depreciated at 15 per cent for the first year after purchase and 30 per cent each year after that. 

The new regulations also affect this asset pool. If it drops below $20,000 by the end of an income year then it can also be deducted immediately, again reducing the time and cost associated with compliance. Businesses that can harness the potential for growth present in these changes look set to benefit in the coming years.