What is the Instant Asset Write Off?
The Instant Asset Write Off (IAWO) gives business owners the ability to claim immediate deductions on the full cost of eligible depreciating assets in the year those assets were first used or installed.
Designed to help small businesses improve cash flow and reduce compliance costs, the IAWO contains a $20,000 threshold, which applies on a per asset basis – meaning small businesses can benefit from instantly writing off multiple assets.
Does my business qualify?
Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000.
Note: This is contingent on whether the assets purchased are first used or installed ready for use between 1 July 2023 and 30 June 2025.
What about assets valued over $20,000?
Whilst assets valued over $20,000 cannot be immediately deducted, small businesses can continue to place these assets into the small business simplified depreciation pool, which are depreciated at 15% in the first income year and 30% each income year after that.
Assets that can either be written off or depreciated (depending on their cost) include;
🚘 Vehicles, such as cars, vans, and trucks (Note: (1) Vehicles will (in most cases) likely fall under depreciation rules. (2) Whilst passenger vehicles have a ‘car limit’ capped at $64,741, trucks, vans and utes are classed as commercial vehicles and remain uncapped)
🔧 Machinery, tools and equipment (such as. tractors, industrial ovens and welding equipment)
💻 Office equipment & furniture (incl. computers, printers, desks and chairs)
🚧 Selected building improvements (incl. new roofs, solar panels, security systems, air conditioning, and electrical wiring) (Note: Capital improvements to buildings, which are covered by the capital works rules, do not qualify for this write-off.)
How to make the most of the Instant Asset Write Off
With exceptional benefits on offer for businesses turning over less than $10M per annum, the IAWO can not only help to lower tax liability, but also make tax-time purchases more accessible.
Want to take advantage of the IAWO without impacting cash flow or dipping into cash reserves? Business finance could be a great option to take advantage of the IAWO this EOFY and claim tax back on interest payments.
To view your eligibility for business finance or get a quote, click here. Alternatively, to view your top options, use our free online loan-finder.
This communication is intended for information purposes only and should not be mistaken for financial advice. Always consult with an accountant or registered tax agent when determining whether or not the Instant Asset Write Off will be advantageous for your specific circumstances and financial situation. The Instant Asset Write Off is subject to strict eligibility criteria, which is outlined by the Australian Government and may be modified or changed at any given time. All information provided is correct at time of publication.
