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$20k instant asset write-off passes Parliament

Key Highlights:

  • Threshold Increase: The instant asset write-off threshold has increased from $1,000 to $20,000 for the 2024 income year.
  • Eligibility Period: Small businesses can write off depreciable assets costing less than $20,000 that are purchased between 1 July 2023 and 30 June 2024.
  • Cashflow Advantage: This allows businesses to claim a tax deduction in the year of purchase, rather than spreading it over several years, providing a significant cashflow benefit.
  • Usage Requirement: To qualify, the asset must be used or installed for a taxable purpose within the specified period. A receipt alone is not enough; the asset must be delivered and installed.
  • Per Asset Threshold: The $20,000 limit applies to each individual asset, so businesses can deduct the full cost of multiple assets as long as each one costs less than $20,000.
  • Future Legislation: A Bill to extend this increased threshold to 30 June 2025 is currently being considered by Parliament.

Legislation increasing the instant asset write-off threshold from $1,000 to $20,000 for the 2024 income year passed Parliament just 5 days prior to the end of the financial year.

Purchases of depreciable assets with a cost of less than $20,000 that a small business makes between 1 July 2023 and 30 June 2024 can potentially be written-off in the year of purchase. It’s a major cashflow advantage because the tax deduction can be taken in the year of purchase instead of over a number of years.

To be eligible, the asset must be first used, or installed ready for use, for a taxable purpose between 1 July 2023 and 30 June 2024. For example, you cannot simply have a receipt for an industrial fridge, it must have been delivered and installed to be able to claim the write-off in 2024.

The write-off threshold applies per asset, so a small business entity can potentially deduct the full cost of multiple assets across the 2024 year as long as the cost of each asset is less than $20,000. A Bill to extend the instant asset write-off threshold increase to 30 June 2025 is currently before Parliament.

Maximising Your Business Benefits with the $20,000 Instant Asset Write-Off

Is your business ready to take advantage of the increased instant asset write-off threshold? This legislative change presents a substantial opportunity to enhance your cashflow by allowing immediate tax deductions on eligible assets.

Ensure your purchases meet the criteria by having them in use or installed by 30 June 2024. Don’t miss out on the potential to deduct multiple assets under $20,000 each.

For personalised advice on how this can benefit your specific situation, and to ensure you are fully compliant, connect with our team. Visit our services page to learn more about our comprehensive support for your business.

Call us today at 1300 888 803 with any questions or to book an appointment with your Modoras professional. We are here to help you make the most of this opportunity.

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