Great news for small businesses: The $20,000 Instant Asset Write-Off is available until 30 June 2025, providing another year of valuable tax relief for eligible purchases. If your business has an aggregated turnover under $10 million, now is an ideal time to invest in essential equipment while taking advantage of immediate tax deductions.
What the Scheme Offers
Eligible small businesses can immediately deduct the full cost of each qualifying depreciating asset that:
- Costs less than $20,000
- Is first used or installed ready for use between 1 July 2024 and 30 June 2025
- Is used in a business that elects to use the simplified depreciation rules for the 2025 income year
This write-off applies per asset, meaning businesses can claim multiple deductions for multiple eligible assets. Qualifying assets can be new or second-hand and can be purchased outright or financed.
What’s Covered (and What’s Not)
Included:
- Plant and equipment
- Business-use vehicles
- Assets used to improve operational efficiency or replace outdated tools
Excluded:
- Capital improvements to buildings or structural renovations
- Assets costing $20,000 or more (these must go into the small business depreciation pool)
Second Element Costs
The scheme also applies to certain second element costs, such as improvements or modifications made after acquiring an asset, provided:
- The business previously claimed a deduction for the asset under the simplified depreciation rules
- The additional cost is incurred between 1 July 2024 and 30 June 2025
- The amount is less than $20,000 and is the first additional cost incurred since the original write-off
Talk to your accountant to clarify what qualifies as a second element cost, particularly if you’re planning to upgrade or enhance existing equipment.
What Happens with Assets Over $20,000?
Assets valued at $20,000 or more are not eligible for immediate write-off, but they can still be depreciated through the simplified depreciation pool:
- Deducted at 15% in the first year
- Deducted at 30% in each subsequent year
- If the pool balance is less than $20,000 at the end of the 2024–25 financial year, the entire remaining balance can be fully written off
Summary
The Instant Asset Write-Off scheme remains a smart tax strategy for small businesses looking to invest in growth and efficiency. By deducting the full cost of eligible assets under $20,000, businesses can reduce their taxable income and boost cash flow. With the deadline set for 30 June 2025, now is the time to plan ahead and make the most of this opportunity.
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