The instant asset write-off allows eligible small businesses to immediately deduct the cost of certain depreciable business assets — rather than depreciating them over several years. For FY2024–25, the threshold is $20,000 per asset for businesses with aggregated turnover under $10 million. Assets costing $20,000 or more enter the small business depreciation pool and are written off over time.
Current Threshold Summary
| Financial year | Threshold per asset | Business size limit |
|---|---|---|
| FY2024–25 | $20,000 | Aggregated turnover < $10M |
| FY2025–26 | $20,000 (legislated) | Aggregated turnover < $10M |
The instant asset write-off threshold has changed frequently in recent years — including temporary increases during the COVID-19 period. Always check the ATO website for the confirmed threshold for the current year before claiming.
Historical Context
| Financial year | Threshold |
|---|---|
| FY2020–21 | $150,000 (temporary COVID measure) |
| FY2021–22 | Full expensing (unlimited — for businesses under $5B) |
| FY2022–23 | Full expensing (extended) |
| FY2023–24 | $20,000 (legislated; some uncertainty during the year) |
| FY2024–25 | $20,000 |
The significant threshold changes over recent years mean it is critical to check the rules for the specific year in which an asset was first used or installed ready for use.
Who Is Eligible?
To claim the instant asset write-off:
- Your business must be a Small Business Entity — aggregated annual turnover under $10 million
- The asset must be used or installed ready for use before the end of the relevant financial year
- The asset must be used at least partly for business purposes
- The asset must be a depreciable asset (not trading stock, land, or a non-depreciable intangible)
If you use the asset for both business and private purposes, you can only deduct the business-use proportion of the cost.
What Assets Qualify?
Most tangible depreciable business assets qualify, including:
| ✅ Generally eligible | ❌ Generally not eligible |
|---|---|
| Motor vehicles | Land |
| Tools and equipment | Depreciable intangibles (patents — different rules apply) |
| Computers and technology | Trading stock |
| Office furniture | Assets used only for private purposes |
| Plant and machinery | Horticultural plants (specific rules) |
| Fit-out costs | Buildings and structural improvements (Division 43 — separate rules) |
The Car Limit
For motor vehicles (passenger cars — not commercial vehicles), the depreciation deduction is capped at the car cost limit: $69,674 for FY2025–26 (GST-inclusive). This is the maximum cost you can use for depreciation purposes, regardless of what you actually paid. If you pay $85,000 for a car, you can only write off $69,674 (multiplied by your business-use percentage).
This car limit does not apply to vehicles not designed to carry passengers — utes, panel vans, and commercial vehicles above 1 tonne are generally uncapped.
How to Claim the Instant Asset Write-Off
Step 1 — Purchase and Use the Asset
The asset must be first used or installed ready for use before 30 June of the relevant financial year. Ordering an asset before 30 June but not receiving it before year end does not qualify.
Step 2 — Determine Business-Use Percentage
If the asset is used for both business and private purposes, establish the business-use percentage (using a logbook, usage records, or a reasonable estimate).
Step 3 — Claim on Your Tax Return
- Sole traders: Include the deduction in the Business and Professional Items schedule — under “Depreciating assets — claims for decline in value”
- Companies: Include in the company tax return — depreciation schedule
- Trusts/Partnerships: Include in the relevant trust or partnership return
You do not need to complete a separate election form — simply claiming the deduction on the return constitutes the election.
Step 4 — Record Keeping
Keep records for 5 years showing:
- The asset purchased
- Cost and date of purchase
- Business-use proportion (especially for dual-use assets)
- That the asset was used or installed ready for use before 30 June
Assets That Cannot Be Immediately Written Off
If an asset costs $20,000 or more (at the FY2025–26 threshold), it is added to the small business general depreciation pool and depreciated at:
- 15% in the first income year
- 30% per year thereafter
If the pool balance falls below $1,000 at year end, the entire balance can be written off immediately.
GST Consideration
If you are registered for GST, the cost you use for the instant asset write-off is the GST-exclusive price (because you will claim the GST component as an input tax credit on your BAS). If you are not registered for GST, use the GST-inclusive price.
Example: A plumber buys $10,000 + $1,000 GST = $11,000 total.
- If GST-registered: write-off deduction = $10,000; claim $1,000 as an input tax credit on BAS
- If not GST-registered: write-off deduction = $11,000
Related Articles
- Small Business Tax Concessions Australia
- Vehicle Tax Deductions
- Depreciation in Australia
- GST and Business Tax hub
Frequently Asked Questions
Can I claim the instant asset write-off if I buy the asset on finance? Yes — if you are the economic owner of the asset (i.e., you bear the risk and enjoy the rewards of ownership, as in a finance lease or hire purchase), you can claim the write-off based on the full purchase price (not just what you’ve paid to date). If the arrangement is an operating lease, different rules may apply.
Does the instant asset write-off apply to second-hand assets? Yes, for small businesses using the simplified depreciation rules, second-hand assets below the threshold qualify for the immediate write-off.
Can I claim the instant asset write-off on a car I also use privately? Yes, but you can only deduct the business-use proportion and the claim is capped at the car limit ($69,674 for FY2025–26). For example, if you paid $55,000 for a car and use it 60% for business, your deduction is $55,000 × 60% = $33,000.
This article provides general tax information. The instant asset write-off threshold and rules have changed frequently. Always verify the current rules on the ATO website (ato.gov.au) or with a registered tax agent before claiming. Find an agent through the Tax Practitioners Board register.