Instant Asset Write-Off – What It Means for Small Businesses in 2024–25

With the end of financial year fast approaching, it’s a crucial time for business owners to review their strategies and take full advantage of any tax-saving opportunities. One such opportunity is the Instant Asset Write-Off (IAWO), which has been extended as part of the 2024–25 Federal Budget. This measure can be a smart way to reduce taxable income while investing in the tools your business needs to grow.

What’s New for 2024–25?

The Government has announced an extension of the $20,000 instant asset write-off until 30 June 2025. This allows eligible small businesses to immediately deduct the full cost of eligible assets costing less than $20,000. To qualify, the asset must be:

• First used or installed ready for use between 1 July 2024 and 30 June 2025
• Used for business purposes
• Below the $20,000 threshold per asset (excluding GST if you are registered)

This initiative is available to small businesses with an aggregated turnover of less than $10 million.

Common Misconceptions

There are several areas where confusion often arises:

• Threshold Application: The asset’s total cost must be below the $20,000 threshold. This value is not reduced by trade-ins or expected resale value.
• GST Consideration: If your business is registered for GST, the $20,000 threshold is GST-exclusive. If not, the threshold is GST-inclusive.
• Multiple Assets: The threshold applies per asset. You can claim the write-off on multiple assets even if their combined value exceeds $20,000.

Financing and Cash Flow Considerations

Investing in new assets doesn’t have to be a drain on your cash reserves. Many businesses choose to finance assets through options like:

• Chattel Mortgages
• Lease Arrangements

These options allow you to claim the instant asset write-off without upfront payments, and can be tailored to match your cash flow and business needs. Each option carries different tax and depreciation implications, so it’s important to choose the right structure with guidance from your advisor.

Strategic Planning is Key

While the instant asset write-off is a valuable incentive, it’s essential to ensure any asset purchases align with your broader business goals and cash flow capabilities. A well-timed asset acquisition can reduce your taxable income—but poor planning could strain your finances.

Now is the time to consult with your Morrows tax advisor. We can help you:

• Confirm your eligibility
• Evaluate the benefits of purchasing vs. financing
• Ensure compliance with timing and recordkeeping requirements

Let’s Talk

Do you need help deciding whether an asset write-off strategy is right for your business this year? Our team is here to provide tailored advice based on your industry, business size and goals.

Contact your Morrows advisor or contact us today to schedule a planning session. Don’t leave it until June 30—start the conversation now.

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