$150k asset write off extended by 6 months
The government's $150,000 instant asset write off has been extended until the end of the year, enabling print businesses to take advantage of the Covid cash-flow benefit for much longer than originally set.
The asset write-off of up to $150,000 means that print business owners effectively receive an instant 27.5 per cent discount on capex. The benefit is intended to head off a collapse in business investment, with the RBA predicting a 13 per cent slump by December.
There is a whole host of great print production equipment that comes in at less than the $150,000 cut-off, including cutsheet digital colour print systems, flatbed and roll-fed wide format printers, and finishing equipment.
For investments in kit over that amount, you can take advantage of a 50 per cent instant depreciation, which is similarly attractive. Both these schemes are effectively bringing forward depreciation from future years, but nonetheless represent a significant incentive to buy now.
The $150,000 translates to a $41,250 discount on a piece of kit that you buy for $150,000, providing that your net profit for the year is at least $150,000. Claiming the depreciation now though means it will not be claimable in following years.
For bigger purchases the benefits are even larger. If, for instance, you bought a $2m press, you could depreciate 50 per cent of that against this year’s profits. If your profit was $1m, you would be saving yourself an instant $275,000 on the cost of that new press.
The instant asset write-down scheme has been in place for five years. It was initially set at $20,000 a year, then it went to $30,000, now the Covid-19 environment has seen the Morrison government supercharge it to keep business moving.
The instant asset write-off has always been popular with small and medium-sized business, but now it gives manufacturers real benefit on more than computers and cars. It is expected to cost the taxpayer $2.5bn over the next two years.
The caveats are that the equipment has to be installed and running by the end of the year, not just on order. But that should be no problem; suppliers are not short of stock.
*Please check your eligibility with your accountant, Print21 is not providing tax advice.