The instant asset write-off deadline approaches

The Federal Budget on May 9, 2023, brought with it a very welcomed announcement that the instant asset write-off would be increased to $20,000 from July 1 2023 to June 30 2024. The scheme helps eligible businesses claim an immediate tax deduction for the full cost of qualifying depreciating assets. With the June 30 deadline for the instant asset write-off program nearing, businesses are feeling the need to make the most of the program before it ends.

If you're thinking about purchasing depreciating assets and hoping to immediately deduct the full cost, then keep reading as we explore the instant asset write-off.

Please note this measure is not yet law.

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What is the instant asset write-off scheme?

Since being introduced in 2015, the program has gained popularity among businesses, becoming an essential element of cash flow and tax planning. It enables eligible businesses to instantly write off the cost of eligible assets costing less than $20,000, instead of spreading it over time through depreciation. However, these initiatives which encouraged owners to invest in their businesses are coming to an end this July.

As the program is nearing its end, it's important to note that businesses may not be fully aware of the long-term consequences and additional red tape that may follow. It is recommended that businesses seek professional advice before making any decisions.

Eligibility to use the instant asset write-off on an asset is dependent on a few key factors, including:

• The asset cost less than $20,000.
• Business annual aggregated turnover must be less than $10 million.
• The asset must be first used, or installed ready for use, between July 1, 2023, and June 30, 2024.

Please be aware that the asset must be installed and prepared for use before 30 June 2024 in order to claim the instant asset write-off. Therefore, prompt action is required.

The instant asset write-off eligibility criteria and thresholds have changed over the years, so it's important to check with your accountant to confirm eligibility.

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Can I write off multiple assets under the instant asset write-off?

The $20,000 instant asset write-off threshold applies to each individual asset. This means small businesses are able to purchase multiple eligible assets and write them off under the initiative, as long as each asset meets the criteria.

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Can I write off an asset that was over $20,000?

If you purchase an asset that does not meet the eligibility criteria — for example, its price was more than $20,000 — it will not qualify for immediate deduction, and will need to use a different method of depreciation.

You may choose to use the small business simplified depreciation rules for any assets over $20,000 to depreciate the asset at a rate of 15% for the first income year, and 30% for the following years.

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How we can help?

‍To make the most of the instant asset write-off before it's too late, please get in touch with our team.

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