The $20,000 instant asset write-off for small business
How the $20,000 instant asset write-off works for Australian small businesses: who is eligible, the per-asset rule, cars and timing.
The instant asset write-off lets eligible small businesses deduct the full business-use cost of an asset in the year it's first used or installed, instead of claiming it over several years.
Who can use it
- Businesses with an aggregated turnover of less than $10 million.
- You must use the simplified depreciation rules for small business.
How the $20,000 limit works
- The limit applies per asset, so you can write off several assets as long as each one costs less than $20,000.
- The whole cost of the asset must be under the limit, even if you only use it partly for business. You then claim the business-use portion.
- If you are registered for GST, the cost is measured excluding the GST you can claim back.
- The asset must be first used or installed ready for use in the income year you claim it.
Assets that cost more
Assets that cost $20,000 or more go into the small business pool, where they are generally deducted at 15% in the first year and 30% each year after.
Common examples
Tools and equipment for tradies, computers and laptops, office furniture, coffee machines for cafés and some vehicles. Car costs are subject to the car limit rules.
Timing matters
Buying an asset just to get a tax deduction rarely makes sense, because you still spend the money. But if you were going to buy it anyway, timing the purchase before 30 June can bring the deduction forward a year. Thresholds have changed often, so check the current rules with us before a big purchase.
This article is general information only and does not take your personal circumstances into account. It is not financial or tax advice. Tax rules change, so please contact us before acting on it. Information current as at the date above.