The instant asset write-off has returned as a key tax-saving tool for Australian small businesses. With the Federal Government extending the $20,000 threshold until 30 June 2025, this initiative allows eligible businesses to instantly deduct the full cost of assets rather than depreciating them over time.
Whether you run a café in Penrith or manage a growing trade business in Western Sydney, understanding how to use this scheme properly could save you thousands come tax time.
1. What Is the Instant Asset Write-Off?
The instant asset write-off allows small businesses to immediately deduct the full purchase price of an eligible asset used in the business, rather than claiming depreciation over several years.
This applies to:
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Equipment
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Vehicles
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Tools
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Office furniture
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Computers and tech
It’s a straightforward way to boost cash flow and reduce taxable income for the current financial year.
2. What’s New in 2025?
For the 2024–25 financial year, the government has extended the $20,000 threshold for eligible small businesses.
Key details:
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Applies to businesses with an annual turnover of less than $10 million
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The asset must be under $20,000 (excluding GST)
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The asset must be installed and ready for use between 1 July 2023 and 30 June 2025
✔ Tip: Multiple assets under $20,000 can be claimed individually—there’s no total cap, just a per-asset limit.
3. What Assets Are Eligible?
The write-off covers most depreciating assets that are used or installed for business use.
Examples include:
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Laptops and desktop computers
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Tools for trades (drills, saws, compressors)
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Coffee machines and display fridges for hospitality businesses
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Work vehicles under the threshold
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Office fit-out items like desks and chairs
💡 Remember: The asset must be used predominantly for business purposes.
4. What’s Not Included?
Some assets and conditions won’t qualify, including:
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Assets costing more than $20,000 (they must be depreciated normally)
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Assets not installed or ready for use by 30 June 2025
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Some leasing or financing arrangements
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Assets allocated to a low-value pool (for those using simplified depreciation)
✔ Tip: If you’re unsure whether your purchase qualifies, speak to a Penrith accountant before committing.
5. How Does It Help with Tax Planning?
The biggest benefit of the instant asset write-off is that it reduces your taxable income for the financial year.
For example:
If your net profit for the year is $110,000 and you purchase a $15,000 eligible asset, you can deduct the full $15,000, reducing your taxable income to $95,000. That’s an immediate saving on your tax bill.
This can be particularly helpful if you’re expecting a strong year and want to invest in new equipment while reducing your tax liability.
6. Timing Is Everything
To claim the deduction for 2024–25, you must:
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Purchase the asset before 30 June 2025
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Have the asset installed and ready to use by that date
Don’t leave purchases to the last minute—supply delays or installation issues could make the asset ineligible.
💡 Some businesses opt to pre-purchase assets toward the end of the financial year for strategic tax planning.
7. Keep Good Records
To support your claim, keep:
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A dated invoice showing the total cost and GST
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Evidence that the asset is in use (e.g., photos, receipts for related expenses)
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A record of how the asset is used in the business
If audited, you’ll need to show the asset was both eligible and used for business purposes.
8. Use It as Part of Your Broader Strategy
While this scheme is useful, it should be part of your overall tax planning strategy—not the whole plan.
Consider:
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Your upcoming cash flow
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Whether financing or leasing is more appropriate
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Whether deferring a purchase until next financial year is smarter
A local accountant in Penrith can walk you through the pros and cons and how it fits your business goals.
Conclusion
The instant asset write-off remains a valuable tool for small businesses wanting to improve efficiency and reduce their tax bill. But it requires good timing, clear documentation, and a smart approach to investment.
Want to make sure you’re using the scheme to your advantage? Carmody Accounting is here to help small businesses across Penrith and Western Sydney navigate the tax landscape with confidence.
