Low-value asset threshold for depreciation
The Government has recently passed legislation that temporarily increases the low-value asset threshold for depreciation from $500 to $5000. This will allow you to deduct the full cost of business assets with a value of less than $5000 in the year they purchase them. This is instead of having to spread the cost over the life of the asset.
The low-value threshold will be raised further to allow the immediate expensing of assets purchased on or after 17 March 2020 that cost less than $5000.
The Government is only raising the threshold for a short time until 16 March 2021. They're doing this so you and other business people keep investing in their businesses throughout the COVID-19 outbreak.
*This is an excerpt from an article published on the IRD website
Low value asset write-off
The ability for businesses to claim immediate deductions for low value assets up to the value of $5,000 will be a welcome incentive to invest in assets. This comes at a time when many businesses may be investing in technology assets to ensure that employees are able to able to work from home if needed. The existing tax rule allows an immediate deduction for assets up to a value of $500; noting that there are some caveats to this rule which we expect will also apply to the new $5,000 threshold:
· If multiple assets with the same depreciation rate are acquired from the same supplier at the same time, the $5,000 threshold applies across all the assets acquired (it is not a per asset threshold);
· If the asset being acquired actually forms part of another item of depreciable property an immediate deduction is not available.
This change is a temporary measure which applies for one year commencing 17 March 2020. From the 17 March 2021, the threshold will move back to $1,000, which is still a significant improvement on the existing $500 threshold (which has not been increased since 19 May 2005).
*This is an excerpt from an article published on the Deloitte website