The instant asset write-off 2022-2023 and beyond
While the temporary full expensing rules (a COVID-era extension of the instant asset write-off) were extended to 2023, the end date is 30 June 2023.
Assets purchased under the rules need to be delivered and installed by 30 June 2023. So machinery, equipment or other assets need to be installed and ready to use to qualify.
If there is a backlog or delay in installing the asset, it won’t be eligible for the full deduction in the 2022–2023 financial year and will need to be moved into the next year.
With the temporary full expensing end date in sight, many business owners are considering their options to reap the benefits.
One of the main challenges for many businesses is finding the funds to make asset purchases. While traditional bank loans can be used to finance assets, the application process can be cumbersome. Also, banks typically won’t lend for some assets, such as used machinery and equipment.
Instant asset write-off $20,000 for 2023-24
On 9 May 2023, as part of the 2023–24 Budget, the Australian Government announced it would improve cash flow and reduce compliance for small businesses by temporarily increasing the instant asset write-off threshold to $20,000, from 1 July 2023 until 30 June 2024. This measure is not yet law.
Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.
The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.
Assets valued at $20,000 or more (which cannot be immediately deducted) can continue to be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year after that.
If you have any questions,
email us or phone our friendly team on
02 9899 3044.
