In an effort to bolster small businesses, the Australian Government has implemented a significant temporary measure. The instant asset write-off threshold has been increased from $1,000 to $20,000 for the 2023-24- and 2024-25-income years. This change aims to improve cash flow and reduce compliance costs for small businesses.
Key Details
- Implementation Date: This measure took effect from 1 July 2023 and will continue until 30 June 2024.
- Eligibility Criteria: Small businesses with an aggregated turnover of less than $10 million are eligible.
- Asset Deduction: Businesses can immediately deduct the full cost of eligible assets costing less than $20,000. These assets must be first used or installed ready for use within the specified period.
- Depreciation Rules: Businesses that have previously claimed an immediate deduction for an asset can also immediately deduct additional costs (referred to as the second element of the asset's cost) if these costs are incurred after the asset was written off and are less than $20,000, provided they fall within the fiscal period from 1 July 2023 to 30 June 2024.
- Per Asset Basis: The $20,000 threshold is applied on a per asset basis, meaning multiple assets can be written off instantly if they meet the criteria.
- Assets Over $20,000: Assets valued at $20,000 or more can be included in the small business simplified depreciation pool, allowing for depreciation at a rate of 15% in the first income year and 30% in subsequent years. Additionally, pool balances under $20,000 at the end of the 2023-24 income year can be written off entirely.
This enhancement to the instant asset write-off facility provides small businesses with greater flexibility in managing their assets and finances, supporting growth and sustainability during the stipulated period.
