The $20K instant asset write-off enables businesses to reclaim instant funds on assets, like agricultural equipment.

In May 2023, the government announced that the asset value threshold would drop from $20,000 to $1,000. Fortunately, the Treasury Laws Amendment put forward a bill that extended the existing terms until 30 June 2024.

Now, all small businesses can apply the initiative for assets valued at $20K or less during the 2024 income year. Keep reading to learn how the instant write-off initiative works and why the government made such changes.

What Is the $20K Instant Asset Write-Off?

Small businesses can deduct the total cost of assets instantly with this initiative. To be eligible, they must meet the following criteria:

  • Make an aggregated turnover of under $10 million
  • Write off assets that cost less than $20,000
  • Apply to assets installed or initially used between July 2024 and June 2024
  • Use simplified depreciation rules for 2024*

*These rules are $20K asset value threshold

The initiative applies to individual assets, allowing businesses to deduct multiple assets but not all under one accumulated value. 

Note that businesses that don’t use the simplified depreciation rules for 2024 cannot use the instant asset write-off. Instead, these businesses deduct the value and calculate professional usage proportions. 

Why Did the Government Reinstate the Write-Off?

In September 2023, the Australian Taxation Office claimed that changes aim to “improve cash flow and reduce compliance for small businesses.” Although the bill is not yet law, this lifeline strives to help small businesses navigate periods of high inflation and continue recovery after the COVID-19 pandemic. 

Which Assets Can You Write Off? 

Assets can vary from building renovations that increase a property’s capital value to new machinery, such as vehicles, manufacturing facilities, or specialist equipment.

Although you can’t instantly write off assets over $20,000, you can apply small business general pooling. This deducts the assets’ depreciated values by 15% in year one and 30% from year two onwards.

How Did Past Depreciation Initiatives Appear?

Over the past 10 years, the Australian government implemented various initiatives to encourage small businesses to invest in assets. Here’s an overview: 

Instant Asset Write-Offs

Date RangeMinimum Aggregated Turnover Asset Value Threshold
1 July 2023– 30 June 2024Below $10 million$20,000
12 March 2020– 30 June 2021Below $500 million$150,000
2 April 2019–11 March 2020Below $50 million$30,000
29 January 2019–2nd April 2019Below $10 million$25,000
1 July 2016–28th 2019Below $10 million$20,000
12 May 2015–30 June 2016Below £2 million$20,000
1 January 2014–12 May 2015Below $2 million$1,000
1 July 2012–31 DecemberBelow $2 million$6,500

Understand Your Eligibility with Advisory One

The $20K instant asset write-off poses a unique opportunity for small businesses to reimburse funds and optimise their cash flow. Contact Advisory One for expert insights into your eligibility and how to write off assets before the strict cut-off point.