Low-value asset threshold raised to $5000 for depreciation

With all the changes announced over the past couple of months this temporary change may have escaped your notice.  When you buy small value assets the IRD have raised the threshold level for depreciation from $500 to $5000 (net GST).  This means that you can immediately write off any asset that costs less than $5,000 that was purchased on or after 17 March 2020.

To summarise the key changes to the threshold for expensing low-value assets are as follows:

  • Businesses can now deduct the full cost of more low-value assets in the year they purchased them, rather than having to spread the cost over the life of the asset.

  • Taxpayers were previously able to claim an immediate deduction for the purchase of assets that cost less than $500.

  • This threshold has been increased, effective from 17 March 2020, to allow the immediate expensing of assets that cost up to $5,000.

  • This will reduce compliance costs for businesses and, as it is a temporary measure, it will incentivise them to bring forward investments and encourage spending.

  • This increase is temporary and will only apply until 16 March 2021. After this date the low-value asset threshold will increase permanently, but only to $1,000.

Law ChangesCathy de Farias