Exciting news for small businesses: Instant Asset Write-Off

Posted at 14:52h in Business, News by Simmons Livingstone

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Last month, Parliament introduced new legislation reintroducing the $20,000 instant asset write-off threshold.

If you’re a small business with an aggregated annual turnover of less than $10 million, you can take advantage of this instant asset write-off for the 2024 income year. The asset you purchase must have a cost of less than $20,000 and be first used or installed ready for use between July 1, 2023 and June 30, 2024.

The great news is that the $20,000 threshold applies per asset. That means you can potentially deduct the full cost of multiple assets throughout 2024, as long as each asset falls below the $20k mark. So, whether you’re eyeing a new computer, some equipment or other business essentials, this is your green light to invest in your business’s growth.

What Assets Are Eligible?

It’s essential to note that the instant asset write-off rules only apply to assets falling within the scope of the depreciation provisions. Capital improvements to buildings, subject to the capital works rules, do not qualify for this write-off.

Assets with a cost of $20,000 or more, which can’t be immediately deducted, can be placed into the small business general pool and depreciated at 15% in the first income year and 30% each income year thereafter.

Eligibility Criteria

To access the $20,000 instant asset write-off, your small business needs to meet a few conditions:

Active Business: Your entity must be actively carrying on a business under general principles in the 2024 income year.
Annual Turnover: Your business’s aggregated annual turnover should be less than $10 million. You can calculate this based on either the current year or the previous year’s figures, whichever suits you best.
Simplified Depreciation Rules: You must choose to apply the simplified depreciation rules for the 2024 income year.
Asset Cost: The asset you’re eyeing must have a cost of less than $20,000.
Usage Timeline: The asset should be first used or installed and ready for use for a taxable purpose between July 1, 2023 and June 30, 2024.

What About Pool Balances?

The increased instant asset write-off threshold also affects how you calculate your pool balances. For the 2024 income year, you’ll be working with a $20,000 threshold to determine whether the full pool balance is written off. Keep in mind that you don’t look at the closing pool balance but rather what the balance would have been if you ignored the current year’s depreciation deductions for the pool in 2024.

Remember, to access this benefit, you must choose to apply the simplified depreciation rules for the 2024 income year. If you meet the criteria, it’s time to make those investments and fuel your business’s growth.

For more information, speak with your Simmons Livingstone advisor on 1800 618 800 or via email at admin@simmonslivingstone.com.au.