Benefit of the Covid-19 Response Act to investors

Posted 8 Apr '20

Article appears under: Accounting and Tax, Covid-19, Legal, Your Expert Team

Buried away in the COVID-19 Response (Taxation and Social Assistance Urgent Measures) Act 2020 is a section amendment that increases the threshold for what is considered a "low value item", meaning the cost of that item is effectively treated as an expense for tax purposes, instead of being depreciated over a number of years as a fixed asset. 

Since 2005, the threshold has been $500 (with some details in the original act linked below).

The emergency legislation increases the threshold to $5,000 for purchases made between 17 March 2020 and 16 March 2021, after which it is set to decrease to $1,000, still more than the original $500. 

Many property investors face expenses over the next year to bring their homes up to the healthy homes standard, with common costs being heating and extractor fans. Assuming the cost of these items can be kept under $5,000 (including installation and delivery), then the cost can be expensed fully for tax purposes within the dates above. 

Note that it is not OK to break large invoices into smaller ones for this purpose. 

Please be aware of our disclaimer. iFindProperty are not qualified tax accountants and this article is for educational purposes only and does not constitute tax advice relevant to your own situation. Please seek independent tax advice from your own accountant prior to any investment decisions. The contents in this article were reviewed by an accountant on April 9, 2020 and subsequent revisions to regulations may not be reflected here. 

References: Covid-19 response act HERE and the original section from the Income Tax Act 2007, to which it refers HERE.

Nick Gentle
Business Owner & Operations Manager
027 358 3855

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