What is the $20,000 Instant Asset Write-Off 2025?
The $20,000 instant asset write-off is one of the most beneficial tax measures available to small businesses in Australia. As announced in the 2024–25 Federal Budget, the scheme has been extended for another year – offering small business owners the opportunity to immediately deduct the full cost of eligible assets under $20,000, rather than depreciating them over several years.
Available until 30 June 2025, this incentive is designed to support business growth and investment while providing immediate tax relief. But to access it, businesses need to meet eligibility criteria and act before the deadline.
Eligibility: Who Can Access the $20,000 Instant Asset Write-Off?
To qualify for the instant asset write-off in 2025, your business must have an aggregated annual turnover of less than $10 million. You must also use the simplified depreciation rules to claim the deduction. The asset must be purchased and either first used or installed ready for use between 1 July 2023 and 30 June 2025.
This means it’s not enough to simply order the asset before the EOFY – it must be up and running in your business operations by 30 June 2025 to qualify.
What Kind of Assets Can Be Claimed?
The instant asset write-off applies to most tangible depreciating assets used in the course of running your business. These can be new or second-hand and must cost less than $20,000 (excluding GST for GST-registered businesses).
Examples of eligible assets include:
- Tools and equipment (e.g. power tools, machinery)
- Office furniture and IT equipment
- Business vehicles (if under the $20,000 threshold)
- Commercial kitchen appliances
- Workshop fittings and storage units
Each asset under the threshold can be written off individually. So, if you purchase multiple eligible items, you can claim each of them in full – provided they meet the requirements.
The Deadline: Why 30 June 2025 Matters
Timing is everything. If your business is planning to invest in equipment, tech, or other physical assets, those purchases need to be fully installed and operational before 30 June 2025 to be deductible under this scheme.
This is particularly important given the risk of delivery delays or installation wait times. It’s essential to plan ahead, especially if you’re purchasing assets that require setup or customisation.
How the Write-Off Works: A Quick Example
Imagine a café owner who buys a $14,000 espresso machine and a $4,000 display fridge. Under normal depreciation rules, these assets would be written off over several years. But with the instant asset write-off, the café owner can deduct the full $18,000 in their 2024–25 tax return – potentially lowering their taxable income significantly and reducing their tax bill.
The asset threshold of $20,000 applies per asset, not per business, making it a valuable tool for business owners who need to upgrade or expand.
What About Assets Over $20,000?
If an asset exceeds the $20,000 threshold – even by a single dollar – it cannot be claimed under the instant asset write-off. Instead, it must be depreciated using the general small business pool, where depreciation is applied at 15% in the first year and 30% in subsequent years.
So if you’re on the cusp of the threshold, it’s worth checking whether a lower-cost alternative might offer a similar function – while still qualifying for the write-off.
How This Scheme Compares to Temporary Full Expensing
The Temporary Full Expensing (TFE) measure introduced during the pandemic allowed businesses to write off almost all capital assets without a cost cap. However, TFE expired on 30 June 2023, and the $20,000 instant asset write-off is now the primary incentive available for immediate deduction of business purchases.
While it’s more limited than TFE, this scheme still provides real, timely tax benefits to eligible small businesses – especially when used as part of a broader EOFY strategy.
Mistakes to Avoid When Claiming the $20,000 Instant Asset Write-Off
Like any tax strategy, there are a few things to be mindful of:
- Missing the deadline: Remember – “installed and ready for use” is the benchmark. Not just purchased.
- Going over the threshold: Assets over $20,000 (even $20,001) are ineligible.
- Confusing GST-inclusive and GST-exclusive amounts: If you’re registered for GST, the asset cost must be under $20,000 excluding GST.
- Incorrectly classifying assets: Not all capital purchases are eligible. Intangibles like software subscriptions, goodwill, or leases don’t qualify.
Strategic Tips to Maximise Your Claim
To get the most out of the $20,000 instant asset write-off in 2025:
- Bundle small purchases: Multiple items under $20,000 can each be claimed individually.
- Time your spending wisely: Make necessary purchases in this financial year to boost deductions.
- Forecast your cash flow: Make sure the investment won’t strain your working capital.
- Document everything: Keep invoices, receipts and evidence of installation/use on file.
How Tax Negotiators Can Help
At Tax Negotiators, we specialise in helping small business owners make the most of available tax incentives – while staying compliant with ATO requirements.
We can help you:
- Confirm whether your purchases are eligible
- Time your investments strategically
- Assess the cash flow impact of asset purchases
- Prepare documentation and records for audit readiness
- Maximise your deductions as part of a tailored tax plan
Final Thoughts
The $20,000 instant asset write-off 2025 offers small business owners a valuable opportunity to reduce taxable income and reinvest in their business. But to access the full benefit, it’s crucial to act early, plan carefully and understand the fine print.
Whether you’re upgrading equipment, fitting out a workspace, or investing in business growth – this incentive could significantly improve your EOFY position.
Need advice? Contact Tax Negotiators today to ensure you make the most of this opportunity – before the deadline passes.
