Under new legislation recently passed COVID-19 Response: Taxation and Social Assistance Urgent Measures asset expense rules are being changed.
The current tax rules allow assets worth up to $500 to be allowed as tax deduction, and the assets over this amount are capitalized and depreciated over its useful life.
The new rules would temporarily increase the low-value asset write-off threshold from $500 to $5,000 in the short term before decreasing this threshold to $1,000 on a permanent basis. It means if you purchase any assets worth $5000 and below you can expense the whole amount in the same year.
The new rules apply on assets purchased on or after 17-03-2020. Until 17-03-2021 the threshold will be $5000, then after this date the threshold will be reduced to $1000 on a permanent basis.
The intended outcome would be encouraging businesses to spend.
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