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4 July 2024  

We previously wrote about the parliamentary squabbling that was causing uncertainty around the implementation of the Instant Asset Write-Off for the 2023/24 financial year.   

To recap, the purchase of an asset is ordinarily considered ‘capital’ and is not immediately tax deductible. 

Businesses purchasing assets may be able to claim a ‘depreciation’ deduction under the Capital Allowance provisions contained in Division 40 of the Income Tax Assessment Act 1997 (ITAA97). 

Where allowable under Division 40, the cost of the asset is depreciated meaning that the cost is progressively deducted over the life of the asset. 

Overlaying the Capital Allowance provisions in Division 40 is Subdivision 328-D of the ITAA97 which contains ‘simplified depreciation’ rules applicable to small business entities (turnover <$10m). 

In particular, Section 328-180 of the ITAA97 provides for an immediate deduction where the cost of the asset is below the legislative threshold.  That threshold being $1,000. 

In the 2023/24 Federal Budget handed down in May 2023, the Labour government announced an increase of the $1,000 limit to $20,000 for the 2024 financial year. 

The Bill containing this measure is Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Bill 2023 which was first introduced to Parliament on the 13th of September 2023 where it languished for months on end. 

In March 2024, the Senate first proposed amendments to the Bill to increase the limit from $20,000 to $30,000, and to lift the eligibility threshold to businesses with turnover of less than $50m. 

When the House of Representatives next sat in mid-May, they rejected the proposed amendments.   

We then watched on as the Senate and House of Representatives played ping-pong with the proposed amendments until the end of the parliamentary sitting period in late May. 

The Bill was once again left to languish until parliament reconvened in the week beginning the 24th of June. 

On the 25th of June the Senate once again considered the Bill and finally capitulated on the previously proposed amendments. 

Having passed both houses of parliament, the Bill finally received Royal Assent on the 28th of June. 

This means that small business entities (turnover <$10m) are able to make use of the Instant Asset Write-Off for assets costing less than $20,000 when completing their 2023/24 income tax returns. 

The ATO have updated their website guidance to reflect the passing of the Bill in order to provide clarity on the finer details.  

Lastly, we note that an announcement was made as part of the 2024/25 Federal Budget to further extend the $20,000 threshold increase through to 30 June 2025. 

Let’s hope that the government can be more proactive in passing the legislation for this one! 

If you need assistance to understand how the Instant Asset Write-Off applies to your business, please get in touch

Sky Accountants Ballarat

Phone: 03 5332 8855

Office Address: 902 Howitt Street, Wendouree, Victoria 3355, Australia

Postal Address: PO Box 2234, Bakery Hill, Victoria 3354

Sky Accountants Gisborne & Macedon Ranges

Phone: 03 5428 1400

Office Address: 45 Hamilton Street, Gisborne, Victoria 3437, Australia

Postal Address: PO Box 270 Gisborne Victoria 3437