ATO Updates: Instant Asset Write-Offs

Great news for small businesses…. 

The Federal Government has extended the instant asset write-off for another year, which means you can keep claiming assets under $20,000 in one go until 30 June 2025

This lets you write off the full cost of assets with a maximum value of $20,000 immediately instead of having to spread the deduction over several years… winning!

What’s Changed?

While the extension is awesome, there are some important updates to keep in mind:

  • The write-off now only applies to assets under $20,000. This is a shift from the earlier rules during the COVID-19 relief period when businesses could write off assets of any value under the the temporary scheme.
  • Our Tip: If you’re thinking about buying a car, most new cars won’t qualify since they usually cost more than $20,000. But you can still write off second-hand cars if they’re under that price. This could be a smart option if you need a vehicle for work without breaking the bank.

Depreciation for Motor Vehicles

If you buy a vehicle that costs more than $20,000, you’ll need to go through the depreciation process instead. If your business is registered for GST, you’ll want to exclude the GST from the vehicle’s price when calculating how much you can claim for depreciation.

For instance, if you buy a car for $55,000 (including GST), you’ll subtract the GST amount ($5,000) and then claim depreciation on the remaining $50,000. If you’re not registered for GST, you can include the full price, but you’ll still be capped by the car cost limit.

Car Cost Limit: What’s the Deal?

The car cost limit is the maximum amount you can claim for depreciation on a car used for business, no matter how much you paid for it. For cars first used or leased in the 2025 financial year, this limit is $69,674. This applies to passenger vehicles designed to carry less than one tonne and fewer than nine passengers. It doesn’t apply to utes or trucks designed to carry more than 1 tonne.

In simple terms, if you buy a car for business and it costs more than $69,674, you can still only claim depreciation up to that $69,674 limit. If you trade in an old car for a new one, the trade-in amount doesn’t affect this car cost limit—it’s based on the full value of the new car.

So Who Can Claim the Write-Off?

The instant asset write-off is now available for businesses who opt into the simplified depreciation rules. To opt into the simplified depreciation, you just need to meet the following criteria:

  • Have an aggregated turnover of less than $10 million from 1 July 2016 onward. Note: Aggregated turnover is based on the annual turnover of your business plus that of any business entity that you’re affiliated with.

What If You’re Not Eligible?

If your business isn’t eligible for the instant asset write-off, don’t stress—there are still options! 

You can still claim regular depreciation on your assets, which means you can spread out the cost over time. Just remember to keep good records of your purchases, and it might be worth chatting to your accountant for tips tailored to your specific situation and clever ways to help you save.

The Bottom Line

If you’re a small business looking to invest in some equipment, tools, or a second-hand car, the instant asset write-off is a great way to cut down your tax bill quickly! Just be sure to keep an eye on those limits.

Have a question or comment?

If you have any questions or comments relating to this article (or any other accounting matter) please get in touch with us at [email protected] and we’ll be happy to assist you.