• In the simplified depreciation rules, assets costing less than the relevant instant asset write-off (IAWO) threshold are written off in the year they are first used, or installed ready-for-use. 
  • This threshold applies to each asset irrespective of whether the asset is purchased new or second-hand. 
  • Motor vehicles are included. 


Changes from 12 March 2020

  • From 12 March 2020 to 31 December 2020, IAWO threshold increase to $150,000 for new or second-hand assets first used or installed ready for use in this timeframes
    • The IAWO is due to revert to $1,000 for small businesses (turnover less than $10 million) after the end date (31 December 2020)
  • For the figures below, 
    • If you are registered for GST, figures below are GST excluded / net gst
    • If you ARE NOT registered for GST, figures below are GST inclusive

  • Accelerated depreciation rate:
    • From 12/03/2020-30/06/2021: Depreciation rate :
      • 50% 
  • Plus existing depreciation rate to the balance of the asset’s cost
  • Eligible assets 
    • be new and not previously held by another entity (other than as trading stock)

    • be first held on or after 12 March 2020

    • first used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021

    • not be an asset to which an entity has applied the IAWO rules or depreciation deductions.

Example 1: IAWO:

Edward and Edna own and run a small irrigation supplies business. On 27 March 2020 the business purchases a luxury car that is designed to carry passengers, for $80,000.  The IAWO threshold at the time they first use the car in the business is $150,000

The cost of the car for depreciation is limited to the car limit at that time. As the cost of the car is above the $57,581 car cost limit for depreciation, the business can only claim an IAWO of $57,581 for the year ending 30 June 2020. 

They also decide to update their work ute and the business purchases a ute for $65,000 on 27 April 2020. The ute isn't designed to carry passengers (and has been set up with all the trade tools in the tray) so the car cost limit for depreciation doesn't apply. The business can claim a full deduction of $65,000 as an IAWO

Example 2: Accelerated depreciation rate:

Joan and Bruce own a company, NC Transport Solutions Pty Ltd. On 1 May 2020, Joan and Bruce purchase a new truck for $260,000, exclusive of GST, for use in their business.

Under past tax arrangements, NC Transport Solutions Pty Ltd would depreciate the truck using their general small business pool- 15% of the asset’s value - leading to a tax deduction of $39,000 for the 2019–20 income year

Under the new accelerated depreciation, NC Transport Solutions Pty Ltd will instead claim a deduction of 57.5% when they add it the pool, leading to a deduction of $149,500 for the 2019–20 income year.