Immediate Write-Off For Individual Small Business Assets & Temporary Full Expensing

 From July 1, 2023, the instant asset write-off threshold has is now a maximum of $20,000.. Conditions for accessing the $20,000 instant asset write-off threshold for small business entities in the 2024 income year include:

  • It only relates to Plant, Equipment and Vehicles. It does NOT relate to Capital improvements to buildings.  
  • The items can be new or second hand. You can have paid cash or they can be financed. 
  • The entity must operate a business during the 2024 income year.
  • Its aggregated annual turnover must be under $10 million, based on either the current or previous year's figures.
  • Choosing to apply the simplified depreciation rules for the 2024 income year is necessary.
  • The asset's cost must be less than $20,000.
  • The asset must be first used, or installed and ready for use, for a taxable purpose between July 1, 2023, and June 30, 2024.

It's crucial to understand that if a small business entity opts out of applying the simplified depreciation rules for the 2024 income year, they won't have access to the instant asset write-off rules, regardless of meeting other basic conditions.
The instant asset write-off threshold applies per asset, allowing small business entities to potentially deduct the full cost of multiple assets throughout the 2024 year, provided each asset's cost is less than $20,000. Additionally, the $20,000 threshold applies to determining whether the full pool balance is written off in the 2024 income year.

Eligible assets for the instant asset write-off rules are those falling within the depreciation provisions. Capital improvements to buildings under the capital works rules are excluded. Assets costing $20,000 or more, which cannot be immediately deducted, can still be included in the small business general pool and depreciated at 15% in the first income year and 30% in subsequent income years.

Other 2024 Year End Tax Planning Opportunities

Disclaimer: This newsletter contains general information only and no responsibility can be accepted for errors, omissions or possible misleading statements. It is not designed to be a substitute for professional advice and does not take into account your individual circumstances. Therefore, no responsibility can be accepted for any action taken as a result of any information contained in this newsletter.