As you are probably already aware, IRD made some changes to the small asset thresholds as part of the COVID-19 support package in March last year. It is timely to remind you of these thresholds as they have changed again this month.
By way of reminder, assets costing equal to or below the following thresholds (GST exclusive if you are GST registered) can be treated as tax deductible rather than depreciable capital assets:
- $500 for assets acquired on or before 16th March 2020
- $5,000 for assets acquired on or between 17th March 2020 and 16th March 2021
- $1,000 for assets acquired on or after 17th March 2021
The temporary $5,000 threshold came to an end on 16th March 2021 when the threshold permanently dropped to $1,000.
Take care when purchasing assets in groups as the threshold applies to groups of assets that fall within the same depreciation rate. For example, purchasing three laptops at once costing $2,000 each would be over the threshold as the total transaction is $6,000. If the same purchase was done over three separate days, the amount per transaction is below the threshold so the cost can be claimed.
If in doubt, please contact your client manager to discuss how these thresholds apply and how you can manage purchases to keep them below the threshold.