Instant asset write-off extended for small businesses

New legislation currently before the Australian Senate will amend the transitional provisions of the tax law, providing an increase to the instant asset write-off threshold to $20,000.

This increase is in line with the 2023–24 income year, providing consistency for small business in understanding what new assets you can immediately deduct.

Eligibility criteria

The following conditions must be satisfied in order to be eligible for the instant asset write-off:

• • The asset must be first installed or ready to use between 1 July 2024 and 30 June 2025
  • The asset must cost less than $20,000
  • The annual aggregated turnover of the business must be less than $10 million.

The $20,000 threshold will apply on a per asset basis, so you can instantly write off multiple assets.

Assets valued over the threshold

Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

Next steps

Small businesses can continue the approach from the previous income year and immediately deduct assets eligible for the instant asset write off.

The intention of this amendment is to assist in your cash flow position compared to deducting assets in the small business depreciation pool, and reduces record keeping on asset registers over time.

The provisions that prevent small businesses from re-entering the simplified depreciation regime (lockout rules) for five years if they opt-out will continue to be suspended until 30 June 2025.

Please free to contact our office should you have any queries in relation to these announcements.