$20,000 instant asset write-off

On Tuesday 9th May the Federal Government delivered it’s budget for 2023-2024.

The big change that most accountants were expecting was the official end to the $150,000 instant asset write off & temporary full expensing methods. The big question was what would replace it.

From 1st July 2023 until 30th June 2024, the Government will temporarily increase the instant asset write-off threshold from $1,000 to $20,000. Small businesses with an aggregated annual 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 1st July 2023 and 30th 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 thereafter. The provisions that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out will continue to be suspended until 30 June 2024.

This means that small businesses have only the month of June to acquire business assets and still maximise the old rules that allow a full deduction up to $150,000 (with the exclusion of cars that maximise at $64,741 including GST). The big thing that any small business should consider if it plans to go shopping in June is that the asset in question must be in use by Friday June 30th or the new rules will apply.

If you have any queries about the old regime or the new regime or whether your business should buy or hold until after 30th June please talk to your accountant at MKG Partners.