Is it under $1,000? Yes? It’s now fully deductible!

Everyone gets confused about what assets are, what depreciation means and when is the best time to buy business assets from a tax point of view. Let me fill you in.​

Fixed assets are items that you use for more than a year, like a car. In other words, they last longer than 12 months and so you spread the cost over several years using depreciation rates Inland Revenue provides.​

Check out our new blog on depreciation if you’ve ever wondered about what that is and how that works.​

But here is a rule that might save you a few tax dollars this year. From 17 March 2021, fixed assets that cost less than $1,000 can be written off immediately. You can waltz into Warehouse Stationery on the 31st March and buy a lovely new printer for $849 and the whole lot is tax deductible against your income in this financial year.​

Please don’t rush out and buy things just to save tax (spending a dollar to save 28 cents does not make sense!) – but if you need office furniture or electronics and they cost under $1,000*, you might as well sneak that cost into this year.​

* If multiple assets with the same depreciation rate are purchased from the same supplier at the same time, the $1,000 applies on a total basis – not to each asset. One phone costing $900 would meet the criteria to be an expense, but if three were purchased ($2,700), all three would need to be classified as an asset and depreciated.​

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