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The Australian Government has extended the Instant Asset Write-Off (IAWO) into the 2024–25 financial year, continuing its role in supporting small businesses and primary producers. This program allows eligible entities to claim immediate tax deductions for the purchase of qualifying assets, providing a valuable tool to improve cash flow and encourage business investment.
In this article, we’ll cover the current rules for 2024–25, highlight special provisions for primary producers, and offer tips on leveraging this incentive effectively.
What Is the Instant Asset Write-Off?
The Instant Asset Write-Off enables eligible businesses to immediately deduct the full cost of new or second-hand assets rather than depreciating them over several years. For the 2024–25 financial year, the key threshold remains at $20,000 (net of GST) per asset, allowing businesses to claim deductions on multiple qualifying purchases under this limit.
This program forms part of the government’s strategy to reduce compliance burdens and support growth across Australia’s small business sector.
Key Rules for 2024–25
To take full advantage of the Instant Asset Write-Off this financial year, businesses must comply with the following requirements:
1. Eligibility
- Businesses with an aggregated annual turnover of less than $10 million can claim the write-off.
- Assets must be purchased and installed ready for use between 1 July 2024 and 30 June 2025.
2. Asset Threshold
- The write-off applies to assets costing less than $20,000 (GST Exclusive)
- Items exceeding $20,000 cannot be claimed under the IAWO but may be eligible for small business pooling.
3. Eligible Assets
- Both new and second-hand assets qualify, including machinery, tools, office equipment, and vehicles.
- Specific exclusions apply, such as assets leased to others or assets not primarily used for business purposes.
Special Considerations for Primary Producers
The primary production sector continues to enjoy additional depreciation concessions specific to Fencing, Fodder Storage and Water Facilities Providing additional tax relief for businesses in agriculture.. For many clients of Synergy Accountants, these provisions offer substantial savings and opportunities:
- Fencing Assets: Immediate deductions are available for fencing-related expenses, such as installation and repairs, with no cost threshold.
- Fodder Storage Assets: Similarly, the cost of building or upgrading fodder storage assets (e.g. Fodder storage sheds, silos, tanks) is fully deductible, promoting better resource management on farms.
- Water Facilities: Investments in water facilities, such as bores, irrigation systems, and tanks, also qualify for immediate deductions.
How to Leverage the Instant Asset Write-Off in 2024–25
Plan Purchases Wisely
Identify essential assets your business needs and ensure they are purchased and installed ready for use before 30 June 2025.
Consult Tax Professionals
Work with a qualified accountant to ensure compliance with eligibility criteria and maximise your deductions.
Combine with Other Incentives
Where applicable, combine the IAWO with other tax incentives like the Energy Incentive Scheme, particularly if your business invests in energy-efficient equipment.
Benefits of the Instant Asset Write-Off
The Instant Asset Write-Off offers several advantages for small businesses and primary producers:
- Improved Cash Flow: Immediate deductions reduce taxable income, leaving businesses with more cash on hand.
- Simplified Tax Reporting: The IAWO eliminates the need for complex depreciation schedules for qualifying assets.
- Encouragement to Invest: The write-off incentivises businesses to upgrade equipment, adopt new technology, and improve operational efficiency.
Why Choose Synergy Accountants?
Going through the complexities of tax incentives like the Instant Asset Write-Off requires expert guidance. At Synergy Accountants, we specialise in tailoring tax strategies to the unique needs of small businesses and primary producers. Let us help you maximise your deductions and achieve financial success.
For more details, get in touch with our team today!
Frequently Asked Questions
What are the rules for the Instant Asset Write-Off in 2024–25?
Eligible businesses can claim an immediate deduction for assets costing less than $20,000, provided the assets are purchased and installed ready for use between 1 July 2024 and 30 June 2025.
What is the write-off for vehicles in 2024–25?
Vehicles used primarily for business purposes are eligible for the write-off if their cost is below $20,000. Vehicles with a cost over $20,000 may be eligible for small business pool depreciation (For luxury vehicles, the car limit for depreciation may apply).
Is temporary full expensing available in 2024–25?
No, temporary full expensing concluded on 30 June 2023. The Instant Asset Write-Off is now the main small business depreciation incentive.
How does the $150,000 Instant Asset Write-Off work?
The $150,000 threshold applied temporarily during the pandemic. For 2024–25, the standard $20,000 threshold applies.
