The instant asset write-off program will end on 30 June 2023. What does this mean for your small business?
Since the scheme was introduced in 2015, it has been very popular among small to medium-sized businesses as it lets them immediately write off the cost of assets valued up to a specific amount. The solar industry needs to consider the changes this might have for solar installers and retailers.
Businesses need to be prepared for the changes
Solar installers could take advantage of the many benefits of the instant asset write-off program. Now, businesses may need to of the long-term implications as the program is nearing its end.
Starting 1 July 2023, a small business with an aggregated turnover below $10 million will need to depreciate any assets they purchase worth over $1,000 over the asset’s effective life. On the other hand, for larger businesses, there is a $100 threshold, and any asset purchase above must be depreciated.
Instead of writing off assets this financial year, businesses must think about it carefully first, as it’s better to save their depreciation for when it’s necessary.
Business owners should also consider supply chain issues impacting their ability to access instant write-offs. In addition, they need to ensure that the asset is installed and ready for use by 30 June 2023 to claim the write-off.
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More burdensome depreciation rules soon?
The end of the program scheme may bring in a hurdle to businesses today as it signals the reintroduction of different and potentially more burdensome tax depreciation rules.
In this case, business owners must act immediately to take advantage of the remaining time left to purchase assets eligible for the instant write-off. In the long term, entrepreneurs must be prepared to face the extra challenge of more complicated and time-consuming depreciation rules that could lead to more administrative work and increased costs.
Preparing to transition to the new depreciation rules will help business owners from being caught off-guard.
Seek professional advice
Seeking professional advise before using your instant asset write-off this financial year is crucial. If your business doesn’t need the deduction, you can save it for when it’s necessary.
Businesses in sectors that rely heavily on physical assets are the ones that may be heavily impacted when the program ends.
Energy Matters has over 17 years of experience in the solar industry and has helped over 40,000 Australian households in their journey to energy independence.
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