As part of the Government’s response to COVID-19, the Taxation and Social Assistance Urgent Measures Bill has been rushed through Parliament to assist our economy. And among the main measures contained, one in particular has been included to help small businesses get the equipment they need right now.
IRD are allowing immediate write-offs on purchases up to $5000, raising the pre-COVID threshold of $500 for low-value assets to encourage spending over the next 12 months (2020-21 financial year).
By letting GST registered entities deduct the full cost of business assets with a value of less than $5000 right now (instead of spreading the cost over the life of the asset), the temporary increase is designed to incentivise investing in the gear you need right away. On March 17 2021, the threshold will be permanently increased from $500 to $1000.
This new tax incentive will be welcome news for businesses looking to buy new, lower value assets in more challenging economic times. Previously, this limit was just $500 and typically used for things like IT. However, now it has been increased, you are able to claim depreciation back in its entirety - this year.