Claiming the instant asset write-off for your business

Businesses may be able to claim an immediate deduction for the business portion of the cost of an asset in the year the asset was first used or installed ready for use, according to the Australian Taxation Office (ATO).

Under the instant asset write-off, eligible businesses can make claims on both new and second-hand assets, as well as multiple assets if the cost of each individual asset is less than the relevant threshold.

Under ATO rules, this threshold is $20,000 for assets that were first used or installed ready for use between 1 July 2023 and 30 June 2024.

To be eligible for the instant asset write-off, your company must be a small business – i.e. one with an aggregated turnover of less than $10 million.

Your business will need to apply the simplified depreciation rules to claim the instant asset write-off, which cannot be used for assets that are excluded from those rules.

According to the ATO, excluded assets include:

• Assets that are leased out, or expected to be leased out, for more than 50% of the time on a depreciating asset lease.
• Assets you allocated to a low-value assets pool before using the simplified depreciation rules.
• Horticultural plants, including grapevines.
• Software allocated to a software development pool (but not other software).
• Assets used in your research and development activities.
• Capital works, including buildings and structural improvements.

The ATO urges businesses to remember that the instant asset write-off eligibility criteria and threshold have changed over time.

“You need to check your business's eligibility and apply the relevant threshold amount. The income year in which you may claim an instant asset write-off depends on when the asset was purchased, first used or installed ready for use.”

While you will need to consult a tax professional for advice around using the instant asset write-off, I can help you finance the purchase of vehicles, equipment, computers, machinery and other assets.