Claiming Assets in your small business in the 2024 year

Posted 3 Sep

The End of Temporary Full Expensing

During the COVID-19 pandemic, businesses had the opportunity to instantly deduct the full cost of qualifying assets, no matter the price, thanks to a policy called temporary full expensing.

This was a lifeline for many, allowing them to invest in essential equipment during tough times and saving on paying tax on their income. This measure ended on 1 July 2023.

The Instant Asset Write-Off (IAWO) for 2024 & Beyond

Even though the temporary full expensing measure has ended, there's still great news for small businesses! The small business instant asset write-off is now part of the law and will continue through the 2025 financial year. Here's how it can benefit your business:

Eligibility: If your business has an aggregated annual turnover of less than $10 million, you can take advantage of the instant asset write-off. This allows you to deduct the full cost of eligible assets that cost less than $20,000, as long as they're first used or installed between 1 July 2023 and 30 June 2024.

Multiple Assets: The $20,000 limit applies to each individual asset, so you can write off multiple items as long as each one costs under $20,000.

Improvements: If you've made improvements to assets that were previously written off in a past tax year, and the cost is under $20,000 and incurred within the eligible period, you can write off these costs too.

New and Second-Hand Assets: The instant asset write-off applies to both new and second-hand assets, though there are some exceptions and limits.

Record Keeping: Make sure to keep proper records, as you can only claim the business portion of the expense, and you'll need documentation to back up your claims.

For assets costing $20,000 or more, they’ll be added to the general small business pool and depreciated at 15% in the first year, with subsequent years at 30%. Plus, you may be eligible for additional deductions under the small business energy incentive or the small business skills and training boost.

Key Takeaways

Buying New Assets: If you’re planning to purchase new assets, remember that if they cost less than $20,000 and your business qualifies, you can instantly write them off.

Tax Planning for 2025: The $20,000 instant asset write-off will continue into the 2025 financial year. It’s an excellent opportunity for managing your taxable income and improving cash flow.

General Small Business Pool: Assets costing $20,000 or more should be placed in the general small business pool for depreciation. This allows you to spread out your deductions over time, providing ongoing tax benefits.

Special rules for cars: Whilst this measure does apply to cars used in business, there is a limit on the cost you can claim.  The maximum value you can write-off a vehicle in the 2024 year is $68,108 and 2025 year is $69,674.  If the car you purchase costs more than this, you will be limited to this value for both GST and depreciation claims.

Assets sold after being written off in a previous year

If you purchased an asset in a previous year that was fully claimed and you come to sell or dispose of that asset in this year or future years.  The gain on the disposal of this asset would be fully taxable.  This is important to be aware of so you can understand how this will impact your tax position in the year of disposal.

We are here to help you

Navigating the complexities of tax regulations and making the most of opportunities like the instant asset write-off can be challenging, but you don’t have to do it alone.

Whether you have questions about how these rules impact your business or you're ready to maximise your deductions for the 2025 financial year, our Empire team is here to help.