The $20,000 instant asset write-off is a valuable tax benefit for eligible businesses in Australia. Let’s dive into the details:
- What Is the Instant Asset Write-Off?^
- Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.
- This deduction can be used for both new and second-hand assets.
- If you’re a small business, you’ll need to apply the simplified depreciation rules to claim the instant asset write-off. However, it cannot be used for assets excluded from those rules.
- Threshold and Eligibility^:
- As part of the 2023–24 Budget, the Australian Government temporarily increased the instant asset write-off threshold to $20,000.
- This higher threshold applies to assets first used or installed ready for use between 1 July 2023 and 30 June 2024.
- To qualify, your business must have an aggregated turnover of less than $10 million2.
- Example Scenarios:
- Let’s say Jack, a sole trader, purchased an excavator for $220,000 in 2021 and claimed its cost under temporary full expensing. In 2023, he added a new bucket to the excavator, costing $19,000. Since this is the first addition to the second element of cost for the asset, Jack can claim a deduction for the full bucket cost in his 2023–24 tax return.
- Additionally, if Jack bought a new MIG welder for $4,500 in 2024 (and uses it for his business), he can instantly write off its full cost in the same tax year1.
Remember to check your specific circumstances and consult with a tax professional to ensure you’re maximizing the benefits of the instant asset write-off. And hey, kudos to you for staying informed about tax matters! If you have any more questions or need further assistance, feel free to ask us on 02 9283 5558.
Reference:^ Learn more about the instant asset write-off on the Australian Taxation Office website.
Disclaimer: Any advice on this site is general nature only and has not been tailored to your personal objectives, financial situation and needs. Please seek personal advice prior to acting on this information. Because of that, before acting on the advice, you should consider its appropriateness to you, having regard to your objectives, financial situation or needs.
