Instant asset write-off extended to 30 June 2025

The Australian Government has extended the $20,000 instant asset write-off for small businesses until 30 June 2025. Announced in the 2024–2025 Budget and now legislated, this extension continues to support small businesses by improving cash flow and encouraging investment in business assets.

What Is the Instant Asset Write-Off?

The instant asset write-off allows eligible small businesses to immediately deduct the business portion of an asset’s cost in the income year the asset is first used or installed ready for use. Businesses can apply the write-off to new and second-hand assets, and they can claim it for multiple assets, provided each asset costs less than the relevant threshold.

Who Is Eligible for the $20,000 Write-Off?

To access the $20,000 instant asset write-off for the 2024–2025 income year, your business must meet all of the following conditions:

• Have an aggregated turnover of less than $10 million
• Apply the simplified depreciation rules
• Acquire the asset and first use it or install it ready for use between 1 July 2024 and 30 June 2025
• Ensure the cost of each individual asset is under $20,000

Aggregated turnover includes your business’s annual turnover plus the turnover of any affiliated or connected entities.

How the Threshold Applies

The $20,000 limit applies per asset, not per business. This means your business can instantly write off multiple eligible assets, as long as each asset costs less than $20,000.

Assets that cost more than $20,000 do not qualify for an immediate deduction. Instead, businesses can place these assets into the small business simplified depreciation pool.

Depreciation Rules for Higher-Value Assets

Assets added to the simplified depreciation pool are depreciated at:

• 15% in the first income year, and
• 30% in each subsequent year

In addition, if the pool balance is less than $20,000 at the end of the 2024–2025 income year, businesses can write off the entire balance.

Assets Covered by the Simplified Depreciation Rules

The simplified depreciation rules apply to most depreciating assets used in a business, including:

• Office furniture and equipment
• Computers and IT equipment
• Tools and machinery
• Tractors and other business vehicles

Assets Excluded from the Instant Asset Write-Off

The instant asset write-off does not apply to certain assets, including:

• Assets leased out for more than 50% of the time under a depreciating asset lease
• Horticultural plants, including grapevines
• Software allocated to a software development pool
• Assets used in research and development activities
• Capital works, including buildings and structural improvements

Why This Extension Matters for Small Businesses

Extending the instant asset write-off helps small businesses:

• Improve cash flow by accelerating tax deductions
• Reduce upfront tax liabilities
• Invest confidently in equipment and tools needed for growth

By planning asset purchases within the eligibility period, businesses can maximise the tax benefits available for the 2024–2025 income year.