As announced in the 2024-25 Budget and now legislated, the $20,000 instant asset write-off limit has been extended for another 12 months, now lasting until 30 June 2025. This extension continues to provide vital support for small businesses.

What is the Instant Asset Write-Off?

The instant asset write-off allows eligible businesses to claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use. The write-off aims to encourage businesses to invest in machinery and equipment that can generate profit, and to help identify areas in their operations that could become more profitable through the right investments.

You can use the instant asset write-off for:

• New and second-hand assets.
• Multiple assets as long as the cost of each individual asset is below the relevant limit.

Who is Eligible for the Instant Asset Write-Off?

To qualify for the instant asset write-off, a small business must apply the simplified depreciation rules. This means the write-off can’t be used for assets excluded from those rules. Eligibility criteria, the ability to use the write-off, and the threshold limits have evolved over time, and depend on:

• Aggregated turnover (the combined annual turnover of your business and any connected or affiliated entities).
• Date of purchase of the asset.
• When the asset is first used or installed ready for use.
• The asset’s cost being below the relevant limit.

For the 2024-25 income year, you must meet the following conditions to claim the $20,000 threshold:

• Have an aggregated turnover of less than $10 million.
• Apply the simplified depreciation rules.
• Acquire the asset and first use or install it ready for use between 1 July 2024 and 30 June 2025.

The $20,000 limit applies per asset, so you can instantly write off multiple assets. Assets valued over $20,000 can still be placed into the small business simplified depreciation pool, depreciated at 15% in the first year and 30% each subsequent year. Additionally, pool balances under $20,000 at the end of the 2024-25 income year can be written off.

What Assets Are Eligible?

The simplified depreciation rules apply to most depreciating assets, such as:

• Office furniture and equipment.
• Computers.
• Tractors or tools.

However, the instant asset write-off doesn’t apply to certain depreciating assets, including:

• Assets leased out for more than 50% of the time under a depreciating asset lease.
• Horticultural plants, including grapevines.
• Software allocated to a software development pool.
• Assets used in research and development (R&D) activities.
• Capital works, including buildings and structural improvements.