The $20,000 instant asset write-off limit (IAWO) extension for the 2024–25 income year is now law. Last May, as part of the 2024–25 Budget, the government announced it would continue to provide support for small businesses by extending the $20,000 instant asset write-off limit for a further 12 months until 30 June 2025. This means that your business may be able to deduct the full business portion of the cost of eligible assets which cost less than $20,000.
How this measure applies to you
If you’re a small business with an aggregated turnover of less than $10 million, this new measure will allow you to deduct:
the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use between 1 July 2024 and 30 June 2025
an amount included in the second element (cost addition) of eligible depreciating asset's cost that they have incurred between 1 July 2024 and 30 June 2025, if they claimed an immediate deduction for the asset under the simplified depreciation rules in a prior income year where the amount is:
the first amount of second element cost incurred after the end of the income year in which the asset was written off; and
less than $20,000.
The $20,000 limit under the measures applies on a per asset basis, so small businesses can instantly write off multiple assets.
What the IAWR can be applied to
You can use the instant asset write-off for:
multiple assets if the cost of each individual asset is less than the relevant limit
new and second-hand assets.
Eligibility and limits
Whether your business if eligible to claim the Instant Asset Write-Off and the year in which you may use it depends on:
your aggregated turnover (the annual turnover of your business and that of any business entities that are your affiliates or connected with you)
the date you purchased the asset
when it was first used or installed ready for use
the cost of the asset being less than the limit.
Check the limits that apply to your eligible business here.
When the cost of an asset exceeds the limit
If you have assets valued at $20,000 or more, they 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. Additionally, you can write off pool balances under $20,000 at the end of 2024-25 income year.
More information is available at the following link:
Instant asset write-off for eligible businesses | Australian Taxation Office
For more information or assistance please contact Infinite Accounting Solutions on 02 9899 4730 or via the contact page at www.ias-ca.com.au.