Some good news for small businesses!
Due to COVID19 situation, the Inland Revenue has revised the income tax rules for low-cost fixed assets.
Before 17 March 2020, any asset purchased with a net cost of more than $500 had to be capitalised and depreciation recorded over the life of the asset. The new rules issued by the IRD state the net cost threshold has been raised to $5,000. This means any assets purchased with a net value of less than $5000 can be charged directly to your Profit and Loss account, instead of the cost being spread over the life of the asset.
The increased threshold will only apply until 16 March 2021 (I.e. for 12 months)
However, from 17 March 2021, the threshold will be permanently increased from $500 to $1,000.
This change is a welcome move by the government to stimulate asset purchases and also recognises that in the long term that the $500 limit was too low.