Instant asset write-off threshold increased and extended to medium sized businesses

Small Businesses
Small business entities (aggregated annual turnover of less than $10 million) will be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.
Assets valued at $30,000 or more, which cannot be immediately deducted, can continue to be placed into the general small business pool and depreciated at 15% in the first income year and 30% each income year thereafter. The small business pool can also be immediately deducted if the balance is less than $30,000 over this period.
The current "lock out" laws for the simplified depreciation rules (prevent small businesses from re-entering the simplified depreciation regime for 5 years if they opt out) will continue to be suspended until 30 June 2020.
The threshold is due to revert to $1,000 on 1 July 2020.

Medium sized businesses
Medium sized businesses (aggregated annual turnover of $10 million or more, but less than $50 million) will also be able to immediately deduct purchases of eligible assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.
The concession will only apply to assets acquired after 2 April 2019 by medium sized businesses (as they have previously not had access to the instant asset write-off) up to 30 June 2020.
Medium sized businesses do not have access to the small business pooling rules and will continue to depreciate assets costing $30,000 or more in accordance with the existing depreciating asset provisions.

The instant asset write off threshold is summarised below:

Asset first installed ready for use between

Small business

(turnover < $10m)

Medium business

(turnover < $50m)

1 Jul 2018 – 28 Jan 2019

< $20,000


29 Jan 2019 – 2 Apr 2019

< $25,000


3 Apr 2019 – 30 Jun 2020

< $30,000

< $30,000

We note that these measures are still subject to the passage of legislation.



Division 7A reforms delayed
The start date of amendments to Div 7A of the Income Tax Assessment Act 1936 will be delayed by a further 12 months to 1 July 2020. 
Measures were announced in the previous 2 Federal Budgets. Amendments announced in the 2016-17 Budget included the self-correction mechanism and safe harbour rules.
In last year's Budget, the Government announced it would clarify the operation of Div 7A of the ITAA 1936 to ensure that UPEs come within the scope of Div 7A.
We will continue to monitor announcements to ensure impacted clients are informed as to the application of these measurers.

Export market development grants (EMDG)
The budget confirmed that the Government will invest an additional $60 million in the export market development grants (EMDG) scheme over the next 3 years.
The EMDG scheme reimburses up to 50% of eligible export promotion expenses above $5,000 provided that the total expenses are at least $15,000. It provides up to 8 grants to each eligible application.
To be eligible, businesses must have:
• income of not more than $50 million in the grant year;
• incurred at least $15,000 of eligible expenses under the scheme (first-time applicants can combine 2 years expenses); and
• principal status for the export business (some exceptions apply, such as non-profit export-focused industry bodies).
The business must also have promoted one of the following:
• the export of goods or most services;
• inbound tourism;
• the export of intellectual property and know-how;
• conferences and events held in Australia.

Luxury car tax refunds for farmers and tourism operators
For vehicles acquired on or after 1 July 2019, eligible primary producers and tourism operators will be able to apply for a refund of any luxury car tax paid, up to a maximum of $10,000.
Currently, primary producers and tourism operators may be eligible for a partial refund of LCT paid on eligible 4-wheel or all-wheel drive cars, up to a maximum refund of $3,000. The eligibility criteria and types of vehicles eligible for the current partial refund will remain unchanged.