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The Sweet Surprise: Australian Government’s Instant Asset Write-Off Extension for Small Businesses

The Australian government consistently reserves the best treats for the end of the financial year. Once again, they have delivered. In May 2023, as part of the federal budget announcement, the government extended the small business instant asset write-off threshold to $20,000 for the 2023-2024 financial year. Recently, the Albanese government confirmed this extension.

What’s the Big Deal?

On May 9, 2023, the Australian Government, through its 2023–24 Budget, announced a plan to boost cash flow and reduce compliance costs for small businesses by temporarily increasing the instant asset write-off threshold. Now that this measure has passed Parliament, the threshold rises from $1,000 to $20,000 for the 2023-24 and 2024-25 income years.

Here are the key details you need to know:

  • Effective Dates: The increased threshold applies from July 1, 2023, until June 30, 2024.
  • Eligibility: Small businesses with an aggregated turnover of less than $10 million can immediately deduct the full cost of eligible assets costing less than $20,000.
  • Per Asset Basis: The $20,000 threshold applies on a per-asset basis, so small businesses can instantly write off multiple assets under this scheme.
  • Prior Deductions: Businesses that claimed an immediate deduction for an asset under simplified depreciation rules in a previous year can also immediately deduct additional costs of less than $20,000 incurred between July 1, 2023, and June 30, 2024.
  • Depreciation Pool: Businesses can still place assets valued at $20,000 or more into the small business simplified depreciation pool, to be depreciated at 15% in the first income year and 30% each year after. They can write off pool balances under $20,000 at the end of the 2023–24 income year.

Why Is Small Business Instant Asset Write Off Important?

This measure significantly benefits small businesses. It allows immediate deductions for a wide range of assets, which improves cash flow, reduces the financial burden, and lowers compliance costs. This flexibility is crucial for businesses that want to upgrade equipment, invest in new technology, or improve operational efficiency without the strain of prolonged depreciation periods.

Last Updated: June 26, 2024

This policy update provides critical support for small businesses, enabling them to thrive and grow in a competitive market. For more detailed information, refer to The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023, which outlines the specifics of the $20,000 instant asset write-off measure.

Endurego: Your Trusted Local Accountant in Inner West Sydney

Amidst all these updates, if you’re wondering how your business can take full advantage of the instant asset write-off, Endurego Tax is here to help. As your trusted local accountant in Inner West Sydney, we are dedicated to decoding these measures to ensure your business is eligible. Let us assist you in navigating these financial opportunities with ease and confidence.

Stay informed, take advantage of these beneficial policies, and let Endurego be your partner in achieving your business goals.