The Instant Asset Write-Off Re-Explained

With the latest Budget announcement, the Instant Asset Write-Off extends into another financial year, offering continued benefits for small businesses.

Businesses with an aggregated turnover of less than $10 million can immediately deduct the full cost of eligible assets priced under $20,000. This applies to assets first used or installed ready for use between 1 July 2023 and 30 June 2025.

Notably, the $20,000 threshold applies per asset, allowing small businesses to write off multiple assets instantly. Assets valued at $20,000 or more can still be placed into the small business simplified depreciation pool. This enables them to be depreciated at 15% in the first income year and 30% in subsequent years.

As for eligibility, businesses can claim an immediate deduction for the business portion of the asset’s cost in the year it is first used or installed ready for use. This applies to both new and second-hand assets. However, eligibility depends on factors such as aggregated turnover, purchase date of the asset, its first use, and its cost being below the threshold. Notably, businesses with an aggregated turnover of $500 million or more are not eligible for the instant asset write-off.

It’s important to note that if temporary full expensing applies to the asset, the instant asset write-off does not. The measure, as it had been outlined in the 2023-24 Budget previously, has still not passed (with only seven weeks of the current financial year remaining). However, the Senate has amended the limit from $20,000 to $30,000, though a response from the lower house is still being awaited.

If you’re uncertain about your eligibility for the instant asset write-off, it’s wise to consult with our trusted team at Lee & Lee Accountants before making significant investment decisions. We can help determine if this strategy aligns with your business goals and circumstances.