What is the Instant Asset Write-Off?

Purchasing assets for your business can be a big expense. To help reduce the burden, the instant asset write-off was introduced so that eligible businesses can claim an immediate deduction for the business portion of the expense in the year the asset was first used.

If you’re looking to benefit from this tax break, read this article to find out important information about the subject, such as what assets are included, the eligibility criteria, and how to claim instant tax write-offs, amongst many more.

What is the instant asset write-off? 

The instant asset write-off measure allows eligible businesses to claim an immediate deduction for the business cost of an asset in the year that the asset was first used or installed (ready for use). 

Businesses can deduct eligible purchases by using this form of accelerated depreciation and reducing a business’s taxable income. This provides the industry with a cash flow benefit that matches the rate at which the business has been taxed. 

This is because the instant asset write-off allows businesses to invest in new assets and claim an immediate tax deduction on those assets. This not only stimulates the Australian economy, but the industry as a whole, by giving businesses the opportunity to purchase assets needed to create new and beneficial products. 

Another advantage is that as long as each asset costs less than the relevant threshold, it can be used for multiple assets. This is also applicable to new or secondhand assets. 

Businesses will need to apply simplified depreciation rules to claim the small business instant asset write-off.

What assets are included in the write-off? 

Australian businesses can claim an immediate deduction for the business portion of the cost of capital assets purchased. Business assets can include:  

• Fixtures and fittings  
• Business tools and plants
• Cars, utes and other vehicles used for business purposes (deductions for vehicles are typically capped during income years)
• Solar panel installations
• Security equipment like CCTV cameras
• EFTPOS, laptops and other technology used for business purposes
• Furniture used for business purposes

Eligibility criteria for the instant asset write-off 

Eligible small businesses typically have an aggregate annual turnover of less than $10 million. However, if you are a medium to large business, it’s important to note that aggregate turnover includes any business connected with your business. This means the turnover of any parent companies, overseas parent companies, and subsidiaries is included. 

Instant asset write-off thresholds 

For small businesses, the threshold for the write-off is capped at $20,000 per asset acquired. This means businesses with an aggregated turnover of less than $10 million may be able to deduct the total cost of eligible second-hand assets. 

These assets should cost less than $20,000 and have been installed or used between 1 July 2023 to 30 June 2025.

This allows eligible businesses to claim a deduction for the portion of the cost of an asset first used or installed ready for use. Your business’s eligibility to apply the correct threshold amount will depend on when the asset was purchased, installed, ready for use, and first used.

Further support announced in the Budget

As part of the 2023–24 Budget, and extended following the 2024-25 Budget, the Australian Government announced further support to improve cash flow and reduce compliance for small businesses. In the budget, the government is temporarily increasing the instant asset write-off threshold to $20,000, from 1 July 2023 until 30 June 2025.

To be eligible for the instant asset write-off, businesses must meet the following criteria:

• Aggregated annual turnover of less than $10 million
• $20,000 threshold applies per asset, allowing multiple asset write-offs
• Assets valued at $20,000 or more can be placed into a simplified depreciation pool
• Provisions preventing re-entry into the simplified depreciation regime remain suspended until 30 June 2025

Exclusions or limits for instant asset write-offs

Five main types of assets which are not eligible for full expensing are:

1. Expensive cars
2. Assets located overseas 
3. Assets not used within a business 
4. Buildings and other assets are eligible for capital work deductions 
5. Some primary production assets which already have an instant write-off scheme (like water facilities and fencing)

Instant asset write-off example: Car limit 

The car limit was implemented to prevent businesses from spending too much on luxury cars at a taxpayer’s expense. For tax purposes, motor vehicles that aren’t considered cars do not need to follow the expensive car limit. This means that commercial vehicles such as trucks, vans, and buses bought and used for business operations can be fully written off. 

For example, let’s say a small office supplies business uses the simplified depreciation rule. On 15 June 2024 the business purchased a car designed to carry passengers for $80,000 (including GST). The car was delivered and ready for business use on 5 December 2024. The car was used 75% of the time for business purposes.

As such, the maximum amount the business can claim for depreciation is $52,255 (75% of $69,674 car limit for 2024–25 income year). They're not able to claim this amount under the instant asset write-off, because the value of the vehicle, $80,000, is greater than the $20,000 instant asset write-off limit for the 2024–25 income year. They add $52,255 to their small business pool, where it depreciates at 15% in the first year and 30% for each subsequent year.

They can't claim the balance of cost of the car ($27,745) under any other depreciation rules.

Alternatively, if your vehicle is not considered a passenger vehicle, the car limit doesn't apply.

What timing applies for instant tax write-offs? 

The instant tax write-off applies to assets attained during the current financial year through to 30 June 2025. Any purchased assets need to be in use or installed and ready for use by 30 June 2025 to qualify.

If you have ordered and paid for assets that haven’t yet arrived at your premises, you cannot claim instant deductions on them. The same applies to assets that have come to your workplace but are still sitting in boxes.

How to claim instant tax write-offs 

Claims are made through your tax return. For a successful claim, make sure to keep your purchase documentation so that you can prove your purchase. It is advised that you consult with a qualified tax practitioner to ensure your tax return is correct.

What records do you need to keep? 

You must keep a record of all purchases you’ve made. It should include information such as when the purchase was made and the amount you paid. 

As mentioned earlier, it’s essential to check your business’ eligibility and ensure that you apply for the suitable threshold amount. This should depend on when you purchased the asset and when it was first used or installed, ready for use. 

To ensure that your business can claim the cost of any asset, you must follow the depreciation rules. You can access more instant asset write-off information on the ATO's website.

Essentially, two important rules are that you must be a business to claim it, and your asset needs to be ready for use. You can’t buy the asset and plan to use it in a couple of years.

How QuickBooks can help

QuickBooks can help to get your accounting and documentation in order. QuickBooks offers a variety of efficient software to help get your finances together. This includes an expense tracker to keep track of the assets you purchase.

While every care has been taken to ensure the accuracy of the information presented as at 28 May 2025, Intuit is not providing you with professional advice and we recommend you obtain your own professional advice. Intuit is not liable for your use of the information presented.