Are there any tax advantages for water tank purchases?

The answer is a resounding YES. And this spells good news for farmers looking to increase their business capacity with newly acquired farming assets.

As part of the Australian government’s economic response to the Covid-19 pandemic, a significant increase in the Instant Asset Write-Off (IAWO) threshold for eligible businesses has been implemented.

The previous threshold at $30,000 has been temporarily increased. Now, you can write-off worth $150,000 exclusive of GST up to the end of June for assets such as water tanks. There are no limits to the number of assets you can purchase provided that each purchase price is within the new threshold.

Who are eligible?

• Businesses with an annual turnover of less than $500 million (up from $50 million)
• Asset cost: $150,000 or less exclusive of GST (up from $30,000)
• Asset purchase is made before 30 June 2020 
  
  

This tax advantage is available for new or second-hand assets “first used or installed ready for use between 12 March 2020 and 30 June 2020.”

Extension: Lately, the government has announced on 9 June 2020 that it will be extending the instant asset write-off until 31 December 2020. Legislative processes are still under way for this extension to take effect.

For more information, visit:  
Asset write-offs for businesses
Your assets and purchases
Extending the instant asset write-off

Advantages when purchasing water tanks:

• Reduced taxable income
• Reduced tax payable
• You can get instant asset write-off for multiple water tanks provided that the purchase price for each is within the $150,000 threshold excluding GST

Disclaimer: Please note that the points made regarding tax incentives are general in nature. Since each business is unique, talk to your personal tax agent to get an accurate appraisal of how new depreciation rules will affect your business.