The instant asset write-off, which was due to expire on 30 June 2024, was recently extended by another 12 months, which means eligible businesses can continue taking advantage of this tax benefit in the 2024-25 financial year.
Instant asset write-off extended until June 2025
Under the instant asset write-off, eligible businesses can immediately deduct the full cost of eligible assets under $20,000 if they are first used or installed by the end of June 2025.
To qualify for the scheme, a business must have an annual turnover of less than $10 million.
The instant asset write-off can be used for:
- New and second-hand assets.
- Multiple assets if the cost of each asset is less than the relevant threshold.
When claiming the benefit, the business must apply the simplified depreciation rules, and it cannot be used for assets excluded from those rules.
According to the ATO, assets valued at over $20,000 (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 year after that.
Understanding How to Take Advantage of Instant Asset Write-Off
The instant asset write-off incentivises businesses to invest in profit-generating machinery and equipment.
The incentive encourages businesses to identify which parts of their operations would become more profitable by investing in the right assets.
For example:
- Could warehouse staff pack and unpack faster if they had a forklift?
- Would the mining company increase production by investing in larger trucks to transport materials?
- Would the assembly line produce more widgets if it had more modern machinery?
The instant eligibility criteria and threshold for the instant asset write-off have changed over time.
Check your business’s eligibility and apply the relevant threshold amount based on the asset’s date of purchase, first use, installation, and readiness for use.
Connect with the Ledge Finance team today to assess your investment potential and borrowing capacity.
