Small Business Support

Small business support continues with the $20,000 Instant Asset Write Off

As part of the 2023-2024 federal budget, the $20,000 Instant Asset Write Off will give small businesses further opportunity to invest in their operations and be able to immediately deduct from their tax bill the full cost of eligible depreciable assets costing less than $20,000. The $20,000 instant write off is tailored to continue support for the Small Business Entity, encouraging investment by means of improving their cash flow, and at the same time lowering the compliance and accounting costs of managing depreciation over several years.

Eligible businesses can claim an instant deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready to use between 1 July 2023 and 30 June 2024. The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. It applies to both new and second-hand assets.

If you are a Small Business Entity, you need to be able to apply the simplified depreciation rules to the asset to claim the instant asset write-off. It cannot be used for assets that are excluded from those rules. (E.g., Assets leased out more than 50% of the time on a depreciating asset lease, assets already allocated to a low value asset pool, horticultural plants including grape vines, software allocated to a software development pool, assets used in research and Development (R&D) activities, capital works).

You will not be eligible to use the instant asset write-off on an asset if your aggregated turnover is $500 million or more. This will only apply to businesses with an aggregated turnover of up to $10 million.

Purchased 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 after that.

The current $150,000 Instant write off or Temporary Full-Expensing measure is due to expire 30 June 2023. If you attempt to use the Temporary Full-Expensing measure after 1 July 2023 for an asset over $20,000, you will not be able to claim anything in the 2023-24 tax return using it.

Looking towards the future and want to make sure you’re doing the right thing when it comes to your tax? Start a conversation with us so we can assist you with your tax planning needs.

Author

Naomi Aspromourgos