If you’re a small business owner, the increase in the instant asset write-off threshold from $1,000 to $20,000 for the 2023–24 financial year is a major win. This change offers a significant cash flow advantage, allowing you to claim a full tax deduction on eligible business assets in the year they’re purchased, rather than spreading the deduction over several years.
Here’s what this means for your business accounting and tax planning strategy.
What Is the Instant Asset Write-Off?
The instant asset write-off is a tax deduction, not a refund. It reduces your business’s taxable income, which could lower your overall tax bill—or create a tax loss that you can carry forward to future years.
If your business is structured as a company, the benefit is applied based on your company’s tax rate. For most small businesses (known as base rate entities), this is 25%. For others, it’s 30%. However, if you’re expecting a tax loss this year, a large deduction may not deliver an immediate benefit.
Who Is Eligible?
To access the instant asset write-off, both your business and the asset need to meet certain criteria.
Business Eligibility
You must:
- Be actively carrying on a business during the 2024 income year.
- Have an aggregated annual turnover of less than $10 million in either the 2023 or 2024 income year.
- Choose to apply the simplified depreciation rules for the 2024 income year.
Important: If your business doesn’t opt into simplified depreciation, you won’t be eligible for the instant asset write-off, even if all other conditions are met.
Asset Eligibility
The asset must:
- Be covered under depreciation provisions (note: assets like capital works, horticultural plants, or leased assets are excluded).
- Cost less than $20,000. For GST-registered businesses, this is the cost excluding GST. If you’re not registered for GST, the full cost including GST applies.
- Be first used or installed ready for use between 1 July 2023 and 30 June 2024.
- Be used for business purposes—there should be a clear link between the asset and your business income.
What If the Asset Costs $20,000 or More?
If an asset costs more than $20,000, and you’ve opted into the simplified depreciation rules, it can still be added to your small business general pool. You can then depreciate the asset at:
- 15% in the first income year
- 30% in each following year
This ensures you still receive a tax deduction over time.
Can You Claim Multiple Assets?
Yes! The $20,000 threshold applies per asset, not in total. That means you can buy several assets under $20,000 and claim a full deduction for each one. Just remember to keep an eye on your cash flow, especially if you’re making multiple purchases close together.
What About Second-Hand Assets?
Second-hand goods are eligible under the instant asset write-off. For example, a second-hand trailer, laptop, or machinery item can qualify—provided it meets all the usual criteria.
Extension to 30 June 2025
In the 2024–25 Federal Budget, the Government announced an extension of the increased threshold through to 30 June 2025. A Bill is currently before Parliament to formalise this change, giving small businesses an extended window to take advantage of this incentive.
Smart Tax Planning Starts Here
Taking full advantage of the instant asset write-off requires a strategic approach. It’s not just about saving tax—it’s about investing wisely, staying compliant, and ensuring your business maintains healthy cash flow.
A professional accountant can help you:
- Understand how the write-off impacts your tax position
- Determine which assets to purchase (and when)
- Avoid common mistakes in claiming deductions
If you’re based in Queensland, speaking with a local accountant on the Gold Coast means you get tailored advice that considers local industry conditions and regulations.
Final Thoughts
The increased instant asset write-off threshold presents a powerful opportunity to boost your business and improve your tax efficiency. Whether you’re investing in tools, technology, or equipment, now is the time to review your business needs and plan accordingly.
Need help making sense of the rules? Want to discuss whether your planned purchases are eligible?