Instant asset write-off: what you need to know

More than 3.5 million businesses can take full advantage of the instant asset write-off, which after a year extension, will end on June 30 this year.

It was introduced by the federal government with the purpose of helping businesses claim an immediate tax deduction for the full cost of qualifying depreciating assets.

An extension or improved replacement of the scheme was introduced during the pandemic as part of a government support package for all businesses regardless of size; this is known as the temporary full expensing scheme.

Both schemes are tax depreciation incentives and were set to help businesses recover from recent instabilities by supporting business investments.

How does it work?

Under this scheme, businesses can claim the full value of all new eligible depreciable assets of any value that are first used or installed before June 30, 2023.

They will also be able to claim full deductions for the cost of improvements made to existing depreciable assets, helping to reduce taxable income.

Australian businesses with a turnover of up to $5 billion are eligible to apply, that’s about 99 per cent of all businesses across the country.

Claims are available for any depreciating assets which may include new business vehicles and equipment. While businesses with aggregated turnover of less than $50 million, assets can also be second-hand.

Why should I take advantage?

The scheme essentially allows businesses to claim a tax deduction for the full value of a purchase after its use, rather than claim depreciation amounts over several years.

With the aim to get businesses to bring forward spending on new assets by allowing them to claim the full tax deduction upfront, and thereby reducing the amount of tax they pay.

What’s next?

We have a dedicated team to help our clients with all the complexities around business and equipment finance. If you would like to know more or require funding, get in touch with the director of commercial and asset finance Angus MacDonald.

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