As part of the 2024-25 Budget and now officially legislated, the $20,000 instant asset write-off limit has been extended for another 12 months until 30 June 2025. This extension continues to provide valuable 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 ready for use. The write-off aims to encourage businesses to invest in assets that will improve profitability and streamline operations.

You can use the instant asset write-off for:

• New and second-hand assets.
• Multiple assets, as long as each individual asset costs less than the relevant limit.

Who Is Eligible for the Instant Asset Write-Off?

To qualify for the instant asset write-off, a business must:

• Use the simplified depreciation rules.
• Ensure the asset is not excluded from those rules.

Eligibility depends on:

• Your aggregated turnover (the total annual turnover of your business and any connected or affiliated businesses).
• The date you purchased the asset.
• When the asset was first used or installed ready for use.
• The asset’s cost being less than the relevant limit.

To claim the $20,000 threshold for the 2024-25 income year as a small business, you must meet the following criteria:

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

The $20,000 limit applies per asset, meaning you can claim multiple assets, as long as each one costs under the $20,000 threshold.

Assets costing more than $20,000 can still be placed into the small business simplified depreciation pool. These assets are depreciated at 15% in the first income year and 30% in each subsequent year. Additionally, any 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, including:

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

However, the instant asset write-off does not apply to certain assets, such as:

• 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.