What is the Instant Asset Write-Off 2024-25?
With the end of the year fast approaching, business owners are being reminded that they can take advantage of the government’s increase in the instant asset write-off threshold to invest in business assets. Many businesses are not even aware of the change, or the types of purchases that are eligible, so we asked our tax accountant, Kevin, to explain how it works.
How does the instant asset write off work?
The instant asset write-off allows small business owners to make business purchases and write off the full cost of the item/s in the current financial year – in this case the 2024-25 financial year. The government has increased the threshold from $1000, to $20,000, allowing eligible businesses to now make business purchases of up to $20,000, and still write off the full cost in a single year. The scheme targets small business and sole traders with an aggregated annual turnover of less than $10 million.
What is the advantage for small business?
Previously, for purchases over $1000, businesses could only claim a deduction for the depreciation of the asset each year. The increase in the instant asset write off amount to $20,000, now allows businesses to make larger investments in their business, and rather than claiming only a small amount each year in depreciation, they can claim the whole amount in a single year.
The advantage is that it provides a larger tax deduction and an opportunity to invest in equipment or technology that many businesses may have been putting off.
What can I buy for my business to get the instant asset write off?
Purchases that are eligible for the instant asset write-off are items that depreciate over time. They also must be installed or ready for use within the 2024-25 financial year.
Common purchases that businesses are taking advantage of include computers and office furniture. Office furniture upgrades traditionally take a back seat to electronics, but the instant asset write-off is allowing long awaited upgrades, that improve staff comfort and productivity, or boost your business image or brand reputation. This can include electronic desks and ergonomic chairs, storage systems, and laptop desks. A new meeting room table or boardroom table is also a common purchase that provides an instant image upgrade for important client meetings.
Can sole traders benefit from the instant asset write-off?
It’s not only traditional bricks and mortar businesses that can take advantage during this financial year. Many people working from home as sole traders, can also take advantage of the scheme to upgrade their home-office, and buy important equipment. A new desk or workstation, or new chair is a good investment for sole traders, that can ease or prevent back and neck strain, and other work-related injuries over time.
Is there a cut off date?
It’s not too late to take advantage of the instant asset write-off for the 2024-25 financial year. You can make a purchase up until the end of the financial year to benefit. Be aware, however, that delays are more likely, the closer to the end of the year we get, as more people rush to purchase before the cut-off date. Also for any purchases that require installation, installation must be completed prior to the end of the financial year to be eligible.
Summary of the instant asset write-off
Here’s a summary of the main points.
- The instant asset write-off is available to small business owners and sole traders with an annual turnover below $10 million
- The scheme allows the full cost of business purchases to be written off in a single financial year
- Assets must be purchased or start being used in the 2024-25 financial year to be eligible
- The limit of $20,000 can include multiple assets
Business advice to purchase office furniture
If you are considering purchasing office furniture prior to the end of the financial year, Abbotts can assist. We are one of a very few office furniture stores in Melbourne where customers can purchase online and visit our showroom to see our range. We also provide lots of friendly advice to help choose the right furniture, and we offer delivery.
You can browse and purchase from our online showroom. If you have any questions, call us on 1300 917 260