If your company is engaged in commercial activities, and you purchase a fixed asset valued below the corresponding “instant asset write-off threshold,” then this asset does not need to be depreciated in the year of purchase. Instead, it can be directly deducted for tax purposes, reducing tax expenses.
The “instant asset write-off threshold” applies to each individual asset, whether it is newly purchased or second-hand.
In recent years, this threshold has been continuously changing, as shown in the table below:
| Time of asset acquisition | Deduction threshold |
| 01/07/2023 to 30/06/2025 | $20,000 |
| 06/10/2020 to 30/06/2023 | Unlimited threshold |
| 01/07/2020 to 05/10/2020 | $1,000 |
| 03/04/2019 to 30/06/2020 | $30,000 |
| 29/01/2019 to 02/04/2019 | $25,000 |
| 12/05/2015 to 28/01/2019 | $20,000 |
| 01/01/2014 to 12/05/2015 | $1,000 |
| 01/07/2012 to 31/12/2013 | $6,500 |
ATO announced that starting from July 1, 2023, this limit will be changed to $20,000. However, the Australian Taxation Office has further regulations on whether the amount includes the GST deductible amount (public or private). Please consult your accountant or us for details.
Below are a few examples to help you understand:
Instant Asset Write-Off Example One:
Company A is a plumbing service company. On September 10, 2023, Company A purchased a cleaning machine valued at $18,000 and began using it. In the following month, the company spent an additional $12,000 to purchase a trailer for transporting the cleaning machine. In the 2024 financial year, a total of $30,000 was spent.
The purchase dates of the two assets fall within the period between 01/07/2023 and 30/06/2025, during which the instant asset write-off threshold is $20,000.
Since this $20,000 threshold applies to each individual asset and the respective expenses for both assets did not exceed the threshold, Company A can claim a direct tax deduction of $30,000 on their 2024 tax return.
Instant Asset Write-Off Example Two:
On August 10, 2023, Company A purchased a new car valued at $30,000, estimated to be used 60% for company operations. According to the purchase date, the instant asset write-off threshold is $20,000. Although the portion used for company operations is $18,000 ($30,000 * 60%), because the total purchase value of the new car exceeds the instant asset write-off threshold, it cannot be deducted in full for that financial year.
How MNY Group Chartered Accountants Can Help:
This article aims to help you understand how the “instant asset write-off threshold” operates in taxation. Through the content of this article, you may have learned that this threshold is subject to change. To maximize your benefits, as a taxpayer, there are measures you can take. The instant asset write-off threshold has revolutionized Australian businesses, fostering growth and success in a competitive environment. MNY Group Chartered Accountants offers efficient accounting software, including asset management expense trackers. If you’re considering purchasing fixed assets in the foreseeable future, we welcome your consultation. Additionally, MNY Group Chartered Accountants provides asset financing and expert guidance for business expansion. Contact us now to seize development opportunities.
Ben Gu is a Chartered accountant, registered tax agent, registered ASIC agent, SPAA specialist advisor and CA SMSF specialist with experience across a wide range of tax and business.
