The instant asset write-off lets eligible small businesses claim an immediate deduction for the business-use portion of a qualifying depreciating asset in the year it is first used or installed ready for use, rather than depreciating it over its effective life.
Eligibility conditions
- The business must have an aggregated annual turnover below the applicable threshold (check the ATO for the current year — the threshold has changed multiple times).
- The asset must be used or installed ready for use in the income year the deduction is claimed.
- The asset must be a depreciating asset under the small business simplified depreciation rules.
- The asset must cost less than the threshold in effect for the income year.
History of thresholds
The threshold has changed frequently: $1,000 (original), $20,000 (2015–2016 budget), $30,000 (2019), $150,000 (COVID economic response, 2020), then temporarily uncapped under Temporary Full Expensing (2020–2023). The threshold reverted to $20,000 for the 2023–24 and 2024–25 income years (subject to legislation in each budget cycle). Always confirm the current threshold and end date on the ATO's website before advising a client.
Practical example
A sole trader with $400,000 turnover buys a $15,000 ute in February for business deliveries. In the 2024–25 income year with a $20,000 threshold, she can deduct the full $15,000 business-use portion (say 80% = $12,000) in this year's tax return rather than depreciating it over eight years.
Common mistakes
- Claiming the full cost including the private-use portion — only the business-use percentage is deductible.
- Applying the write-off to assets excluded from the simplified depreciation pool (e.g. certain primary production assets, assets leased to non-associates on arm's length terms).
- Assuming the same threshold applies across multiple years — always verify for the specific income year.