Instant Asset Write-Off Scheme

The objective of an instant asset write-off policy is to stimulate economic growth by encouraging businesses to invest in new assets.

For the past two years, annual legislation was required to increase the maximum asset value from $1,000 to $20,000 in response to previous Federal Budget announcements. In the recent Federal Budget, the government did not mention the scheme – however the Prime Minister made an election pledge to extend the $20,000 instant asset write-off for another 12 months (until 30 June 2026). Without this pledge, the threshold for immediate asset deductions would revert to $1,000 from July 1, 2025.

Understanding the instant asset write-off

The instant asset write-off allows eligible businesses to immediately deduct the full cost of qualifying assets in the year they are first used or installed, rather than depreciating them over several years. This immediate deduction improves cash flow, enabling businesses to reinvest in their operations more readily.

Available to businesses with an aggregated turnover of less than $10 million, the instant asset write-off can be used for:

• multiple assets if the cost of each individual asset is less than the relevant limit
• new and second-hand assets.

With the limits changing almost annually each year, it makes it hard for businesses to plan investments into their business. And when you look at the limits in place over the past five years, it’s easy to see why:

• 1 July 2023 to 30 June 2025 –  $20,000 limit
• 1 July 2021 to 30 June 2023  –  $1,000 limit
• 12 March 2020 to 30 June 2021 – $150,000 limit (provided it was on or after 12/05/15 and by 31/12/20)
• 2 April 2019 to 11 March 2020 –$30,000 limit

What does the Coalition say?

To provide small businesses with greater certainty and encourage investment in new assets, the Coalition has committed to making the instant asset write-off permanent with a threshold of $30,000, if elected.

The MFAA view

Our members increasingly support small business customers with their commercial lending and asset finance needs. Small businesses, including our members, need certainty so they can plan for the long term. The MFAA share the same view as the Commercial and Asset Finance Brokers of Australia (CAFBA) and COSBOA in advocating for the instant asset write-off to be increased and be made permanent.