Instant asset write-off deadline alert

This scheme has some distinct advantages:

• Multiple assets: Each asset under $20,000 can be claimed separately -new, second-hand, or improvements.
• Deadline alert: Unless extended, this benefit drops dramatically to $1,000 from 1 July 2025.

How does it help right now?

The instant asset write-off provides immediate financial benefits, enhancing cash flow and reducing administrative complexity:

• Cash flow boost: Immediate tax savings up to $5,000 per asset at a 25% company tax rate.
• Multiple deductions: For example, a tradie could deduct a ute canopy ($19,000), trailer ($18,000), and tools ($4,000) immediately, potentially saving around $10,000 in tax at the 45% sole-trader rate.
• Simplified bookkeeping: No complicated depreciation calculations needed.
• Reinvestment incentive: Upgrade tools, tech, or vehicles sooner to boost productivity and reduce tax.

Who benefits most?

Certain types of businesses stand to gain more from this policy due to their operational needs and profitability:

• Profitable small businesses (sole traders, partnerships, companies, trusts) paying tax.
• Businesses needing multiple modest assets - tradies, cafés, creative agencies, and clinics.
• Operators who missed Temporary Full Expensing (ended June 2023).

Situations where it might not help

However, the instant asset write-off isn't suitable for every scenario. Here are situations where it may not be advantageous:

• Loss-making or breakeven businesses: No immediate cash benefit if there's no taxable income.
• High-value purchases (over $20,000): These assets revert to normal depreciation.
• Businesses near $10m turnover: Risk losing eligibility if turnover slightly exceeds the threshold.
• R&D-heavy firms: Accelerated deductions might dilute R&D tax offsets.

Six ways to capitalise before 30 June 2025

To maximise your advantage, consider these practical steps before the policy potentially changes:

1. Advance purchases: Ensure assets are delivered and ready for use by the deadline.
2. Split purchases: Invoice separately (hardware/software) to stay under $20,000.
3. Buy second-hand: Vehicles and refurbished gear qualify too.
4. Smart financing: Use chattel mortgages or hire-purchase agreements.
5. Write off pools: Small-business pool balances under $20,000 on 30 June 2025 can be fully deducted.
6. Watch lead times: Order vehicles and specialised equipment early.

What you'll miss if it drops to $1,000

The potential drop in the asset threshold will significantly impact small business cash flows and competitive positioning:

• Big cash-flow impacts: For example, deducting a $19,500 ute tray immediately saves $4,625 now, but only $250 from July 2025.
• Less certainty: Stretched depreciation complicates budget planning and bookkeeping.
• Reduced competitiveness: Delayed upgrades can put you behind rivals.

Stay informed and proactive

Preparation is key to ensuring you benefit fully from this policy:

• Track your planned asset purchases closely.
• Model tax savings now versus post-2025.
• Stay updated with Budget announcements and potential policy changes.

Bottom line

 If you're planning to invest in assets under $20,000, act before 30 June 2025 to maximise your tax savings and stay ahead of potential changes.

Got questions about how this policy change could impact your business?

Call us on 1800 847 4329 or book a time with our accounting team

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