Making the Most of the $20,000 Instant Asset Write-Off for Business in 2024

As we near the end of the financial year, many small and medium-sized businesses are actively looking for ways to invest in their operations. With the recent government announcement, the $20,000 instant asset write-off has been extended through June 2025, providing a continued opportunity for businesses to upgrade or expand their fleets and other equipment with significant tax advantages.  

The instant asset write-off allows businesses to claim immediate tax deductions on the purchase of eligible assets costing less than $20,000. Originally introduced in 2015, this scheme has undergone several extensions to support businesses during various economic challenges. For the 2024 income year, the government has reaffirmed a fixed threshold of $20,000 for small businesses, applicable to assets first used or installed between July 1, 2023, and June 30, 2024.

Eligibility for the instant asset write-off remains targeted at small businesses with the following criteria:

• Business Operation: Must be actively operating in the 2024 income year.
• Turnover Limits: Annual turnover must be less than $10 million.
• Asset Cost: Each asset purchased must cost less than $20,000.
• Depreciation Rules: Businesses must opt into the simplified depreciation rules for the year they claim the write-off.
• Usage Requirements: Assets must be first used or installed ready for use within the specified timeframe.

• New vs. Used Vehicles: Consider what best fits your needs—new vehicles offer the latest technology and full warranties, while used vehicles might be more cost-effective and readily available.
• Total Ownership Costs: Remember to factor in all expenses, including insurance, maintenance, and operational costs. Only the business use portion of these costs is deductible.
• Efficient Financing: Getting pre-approved for financing can simplify the purchase process.
• Future Business Needs: Choose vehicles that meet both your current and future business requirements.
• Tax Benefits: Remember, purchasing assets such as vehicles can offer significant tax benefits under the instant asset write-off. For detailed advice on how this can benefit your business's tax situation, we recommend speaking with your accountant. You can also review the ATO guidelines for further information.