Question: I run a small business and bought something for $22,000 including GST (which is $20,000 without GST). The instant asset write-off rules say you can write off things that cost less than $20,000, but anything $20,000 or more needs to be added to the balance sheet as a capital expense. So, based on this, do I need to put the asset on the balance sheet for $20,000 instead of counting it as a regular expense in the profit and loss account? Is this what you understand from the rules?
Answer: Yes, you've got it mostly right. The instant asset write-off applies to the cost of the asset before GST, so it's $20,000 without GST. If your business is registered for GST, you can immediately expense assets that cost less than $20,000 through the profit and loss account. But if the asset costs $20,000 or more (with or without GST), it needs to be put on the balance sheet as a capital expense. So, if your asset costs $19,999 (without GST), you're good to go for the instant write-off.