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The Clock is Ticking on Instant Asset Write-Offs

30 June 2025 marks the end of Instant Asset Write-Offs of up to $20,000 per business asset…

Are you operating a small business? Have you opted to use the simplified depreciation rules? If so, the approaching deadline of 30 June 2025 to enjoy instant asset write-offs means you need to move quickly to secure this substantial tax benefit. The Australian Taxation Office (ATO) has adjusted the eligibility and amounts concerning asset write-offs a few times over recent years, and has extended the scheme in various federal budgets. There is no guarantee, however, that any further extensions will be granted following the end of the 2024-25 financial year. That’s why business owners who want to enjoy the tax benefits and are looking to add value to their business with new vehicles and equipment have just a few months to make a move.

What is the instant asset write-off?

Businesses who meet eligibility criteria (more on that below) can claim an immediate tax deduction for the business use portion of an asset in the year it is first used, or installed ready for use. It can be claimed for multiple assets, if the cost of each is less than the threshold, as well as for both new and second-hand assets.

The instant asset write-off threshold for small businesses is currently $20,000 for assets used or installed ready for use between 1 July 2024 and 30 June 2025.

Is my business eligible for the instant asset write-off?

Businesses with aggregated turnover of less than $10 million, using simplified depreciation rules, are eligible for the instant asset write-off.

When can I claim the instant asset write-off?

The cost of your eligible assets below $20,000 can be deducted in the same financial year in which the asset was purchased/ready for use. For example, machinery purchased now but installed on site at 1 July 2025, or a vehicle ordered now but delivered on 1 July 2025 would not be claimable (unless the scheme is extended, in which case it will be deductible in the 2025-26 financial year).

If a deduction has been claimed for the asset under simplified depreciation rules in a prior financial year, you can deduct an amount included in what’s known as the “second element” of that asset’s cost (amounts you spend over time to bring the asset to its present condition and location, such as a cost of improving the asset), where the amount was incurred in, at a minimum, the year following initial write-off, and is less than the current $20,000 threshold.

Which types of business asset can be claimed?

Businesses eligible for the instant asset write-off can claim a deduction on assets in line with those eligible under simplified depreciation rules. These are assets with limited effective life, the value of which are reasonably expected to decline with use, including tools and equipment, IT equipment such as computers, office furniture and equipment, and motor vehicles.

In particular, the substantial write-off amount is what makes the purchase of work vehicles so appealing. Many business owners who are looking to update their work car do so using the instant asset write-off.

Does it matter whether I purchase the asset using cash or finance?

The immediate write off can be utilised regardless of how the asset purchase is funded. However, do not leave it until the last minute if finance approval is needed and you wish to purchase the asset before 30 June 2025.  Note – GST registered businesses are generally able to claim back GST on the asset purchase, whether it is paid using cash, chattel mortgage, hire-purchase agreement or loan funding.

How does GST affect the threshold?

If you are registered for GST, the threshold applies to the total cost including the GST component. E.g. a vehicle costing $22,000 ($20,000 excluding GST) would be eligible for the instant asset write-off, including its $2,000 GST component.

If you are not registered for GST, the total cost of the asset (including any GST listed on the invoice) must not exceed $20,000. E.g. the same vehicle would have to have a maximum purchase value of $20,000 (incl GST) to be eligible.

What are some other instant asset write-off tips?

• For vehicle purchases, be careful that any initial accessories are included as part of the total costs when applying the $20,000 threshold.
• The total cost of vehicle trade-ins are NOT reduced from the purchase cost when applying the threshold.
• It is possible to claim the threshold for multiple asset purchases, providing they are not part of a ‘set’.
• Obtain professional advice from an accountant to ensure that purchases you make for your business will be eligible.

It is important that you act quickly if you intend on claiming the instant asset write-off on or before 30 June 2025.  Obtaining finance allows you to obtain a deduction during the year the asset is acquired/ready for use and pay later.

If you need any more information on how to navigate the instant asset write-off, or guidance on how to access it, get in touch with the Finance team at McKinley Plowman (Paul Moran and Paul Tate) on 08 9301 2200 (Joondalup), 08 9325 2411 (Perth), or visit www.mckinleyplowman.com.au/contact-us/ to book an appointment.

Further Reading: Instant asset write-off for eligible businesses | Australian Taxation Office

written by:

Paul Moran

Paul has over 35 years of experience in finding financial solutions for homebuyers, investors and business owners.
A licensed broker and member of the Mortgage & Finance Association of Australia (MFAA), Paul’s extensive experience includes 20 years with a major bank, seven of which were as commercial banking manager.
Paul delivers a holistic financial solutions to achieve the best possible outcome for a client’s personal or commercial lending needs. Paul also provides a comprehensive financial consultancy to business owners on commercial, equipment and invoice finance.