The instant asset write-off has been one of the ATO’s most useful concessions for small business owners — but the rules have changed several times in recent years, leaving many business owners confused about whether it still applies to them, and if so, how much they can actually claim. Here’s a plain-English breakdown of where things stand right now.
What Is the Instant Asset Write-Off?
In simple terms, the instant asset write-off allows eligible businesses to immediately deduct the full cost of certain depreciating assets in the year they’re purchased and first used (or installed and ready for use), rather than depreciating the cost over several years.
This is a genuine cash flow benefit. Instead of claiming, say, 20% of an asset’s cost each year for five years, you claim the entire amount in year one — reducing your taxable income (and therefore your tax bill) right now.
Important: The instant asset write-off only reduces your tax — it doesn’t eliminate the cost of the asset. A $20,000 asset at a 25% tax rate saves you $5,000 in tax. The remaining $15,000 still came out of your pocket.
What's the Current Threshold?
This is where it gets a little messy, because the threshold has changed repeatedly. Here’s a summary of the current rules for the 2024–25 financial year:
| Annual Turnover | Threshold Per Asset | Applies To |
|---|---|---|
| Under $10 million | $20,000 | Small business entities |
| $10M – $50M | $20,000 | Medium business entities |
| Over $50M | Standard depreciation rules apply | Large businesses |
The $20,000 threshold has been extended through 2024–25, but is subject to annual confirmation by Parliament. Always verify the current threshold with your accountant before making a purchasing decision based on this concession.
What Assets Qualify?
The write-off applies to most tangible depreciating assets purchased for use in your business. Common examples that Wollongong trades and professional services businesses claim include:
- Tools and equipment (under the per-asset threshold)
- Work vehicles (subject to the car limit — $69,674 for 2024–25)
- Computers, tablets, and business technology
- Office furniture and fit-out items
- Machinery and specialised equipment
- Safety and protective equipment
The asset must be used (or installed ready for use) in the same income year you’re claiming. Ordering an asset in June but not receiving it until July means you claim it in the following financial year.
A lot of business owners buy equipment in June thinking they'll get a massive tax refund — then they're disappointed when the numbers don't work out the way they expected. Understanding what you're actually saving, and whether you genuinely need the asset, is the conversation to have before you buy.
What's Excluded?
Not everything qualifies. Assets that are generally excluded include:
- Horticultural plants
- Capital works (i.e., building improvements — these follow a separate depreciation schedule)
- Assets used entirely for private purposes — you must apportion the deduction if there’s any personal use
- Trading stock (that’s claimed differently)
- Assets that cost more than the threshold (these go into the small business pooling rules instead)
Do I Need to Be GST Registered to Use It?
No — eligibility for the instant asset write-off is based on your annual aggregated turnover, not whether you’re registered for GST. However, if you are registered for GST, the cost base of the asset for write-off purposes is the GST-exclusive price (because you’ll claim the GST back separately via your BAS).
If you’re not GST registered, the full GST-inclusive cost is used.
What Happens If the Asset Costs More Than the Threshold?
If an asset costs more than $20,000, it generally can’t be immediately written off. Instead, it goes into the small business simplified depreciation pool, where it’s depreciated at 15% in the first year and 30% each year after that.
There’s also a provision that if your pool balance falls below the threshold at the end of the year, you can write off the entire remaining pool balance immediately — a handy clean-up mechanism worth discussing with your accountant at year end.
How Do I Claim It?
The write-off is claimed in your income tax return for the year in which the asset was first used or installed. It’s reported as a deduction against your business income. Your accountant will handle the mechanics, but the key things you need to document are:
- A tax invoice showing the cost of the asset
- Evidence that the asset was used (or installed ready for use) in the relevant income year
- A log or record showing business use percentage if the asset has any private use
