January 12, 2025
The Australian Government has updated the instant asset write-off scheme, providing new opportunities for small businesses to enhance cash flow and reduce compliance costs. With the latest changes from the Australian Taxation Office (ATO), it’s crucial to understand how these updates impact your business.
What’s New for the Instant Asset Write-Off?
The instant asset write-off threshold has been temporarily increased and extended, offering greater flexibility for small businesses. Key details include:
- Eligibility: Small businesses with an aggregated turnover of less than $10 million are eligible.
- Increased Threshold: The threshold for eligible asset purchases has increased to $20,000 (up from $1,000) for the 2023-24 and 2024-25 income years.
- Timeframe: Assets must be first used or installed ready for use between 1 July 2023 and 30 June 2024 to qualify for the deduction. The extension to 30 June 2025 announced in May 2024 is not yet legislated.
Key Provisions
- The $20,000 threshold applies on a per-asset basis, allowing small businesses to instantly write off multiple assets under the simplified depreciation rules.
- Cost Addition Deductions: Businesses that have already claimed an immediate deduction for an asset can also deduct amounts added to the asset’s cost (the second element) if:
- The cost addition is the first incurred after the asset was written off.
- The cost is less than $20,000.
- The cost is incurred between 1 July 2023 and 30 June 2024.
Simplified Depreciation Pool: Assets valued at $20,000 or more can be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% in subsequent years. Pool balances under $20,000 at the end of the 2023-24 income year can be written off.
Benefits of the Instant Asset Write-Off
This scheme allows small businesses to:
- Boost Cash Flow: By immediately deducting eligible asset costs, businesses can reduce their taxable income.
- Simplify Compliance: Streamlined rules reduce the administrative burden of managing depreciation schedules.
- Encourage Investment: The per-asset threshold enables businesses to invest in essential equipment, vehicles, and other capital assets.
Upcoming Changes
The Australian Government has proposed extending the $20,000 instant asset write-off until 30 June 2025, as part of the 2024-25 Budget announced on 14 May 2024. However, this measure is not yet law.
Accurate Reporting with Professional Assistance
To maximise the benefits of the instant asset write-off, it’s important to ensure accurate reporting of eligible purchases. Qualified quantity surveyors and tax professionals can help:
- Correctly allocate asset costs.
- Identify eligible assets under the scheme.
- Ensure compliance with ATO guidelines.
Take Advantage of the Updates Today
The instant asset write-off provides a unique opportunity for small businesses to invest and grow. With the increased threshold and extended eligibility, now is the time to assess your needs and make strategic investments. Consult with a tax professional to ensure you’re leveraging all available deductions and staying compliant with the latest regulations.
How TDQS Can Help You Maximise Your Tax Deductions
TDQS specialises in helping businesses unlock the full potential of their tax deductions. With our expertise in depreciation schedules and asset allocation, we ensure that you’re fully compliant with ATO guidelines while maximising your returns. Whether it’s identifying eligible assets or optimizing your depreciation strategy, TDQS is your trusted partner for tax savings.
Contact us today to see how we can help your business thrive with the instant asset write-off.
