Coronavirus: Apply for $150k for equipment by FY end

Any business with a turnover of up to $500m can take advantage of the government's new $150,000 instant asset write-down on newly purchased plant and equipment, but they must do so by the end of June.

The new write down is a massive uplift in the previous limit, which was $30,000. It means that if a business invests the full $150,000 it can knock it all off taxable income, which will mean $41,250 comes off its tax bill, assuming it is paying 27.5 per cent tax, or $45,000 if paying on the 30 per cent rate applicable to businesses with a turnover in excess of $50m.

It is also a huge expansion in the number of qualifying businesses – the previous cut-off was a turnover of $50m, now it is ten times that amount.

The $150,000 instant asset write down is applicable to all assets purchased for the business for production and processes. Investment does not need to be in new equipment, only new to the company, it can be pre-owned. However, the equipment must be installed or operating, and invoiced by the end of June.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg said they are determined to keep businesses operating through the coronavirus crisis with the multibillion-dollar assistance package blowing a massive $17.6bn hole in the budget.

“Any such purchase from now until 30 June – including a truck, a tractor, a shop fit-out – can be written off immediately,” Frydenberg said.

That includes a significant amount of packaging and processing equipment, with many packaging and labelling machines and systems falling under the $150,000 mark.

Chairman of the Australian Packaging & Processing Machinery Association, Mark Dingley, told PKN he welcomed the government’s initiative.

“For Australian manufacturers and food processors, this is a brilliant opportunity to upgrade inefficient and outdated equipment or invest in those automated solutions that they’ve been thinking about – packaging & processing machinery that will help drive efficiencies, improve quality, save costs and ultimately boost your bottom line as well as drive top line growth,” Dingley said.

The scheme is part of the federal government's first tranche of assistance packages to small- and medium-sized enterprises. That initial tranche also includes a cashback payment up to $25,000 from the ATO for companies with employees. The government will also pay half the wages of apprentices, up to $21,000, for the next nine months.

The second tranche is currently being worked on with details expected to be released soon.