About the instant asset write-off
Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.
The instant asset write-off (IAWO) can be used for:
- multiple assets, if the cost of each individual asset is less than the relevant limit
- new and second-hand assets.
If you are a small business, you need to apply the simplified depreciation rules to claim the IAWO. The write-off can't be used for assets that are excluded from those rules.
A small business that has claimed an immediate deduction for an asset under the simplified depreciation rules in a prior income year can also immediately deduct an amount included in the second element (cost addition) of that asset's cost, where the amount is both:
- the first deductible amount of the second element cost incurred after the end of the income year in which the asset was written off
- less than the relevant limit amount for the income year it is being claimed.
Example 1: purchase of assets and cost additions under the relevant limit
Jack is a sole trader with an aggregated turnover of less than $10 million who uses the simplified depreciation rules. He purchased an excavator for $220,000 for his business and first used it on 20 January 2021. He claimed the cost of the excavator under temporary full expensing in his 2020–21 income year tax return.
On 15 August 2024, Jack purchased, and installed ready for use, a new bucket for his excavator at a cost of $19,000. He did not have any previous cost additions for the excavator. The bucket is the first addition to the second element of cost for the asset which Jack had written off in an earlier income year. This means he is able to claim a deduction for its full cost in his 2024–25 income year tax return as it is under the relevant limit of $20,000.
Jack also purchased a new MIG welder for $4,500 which was delivered ready for use on 12 May 2025. As the cost of the MIG welder was under the relevant limit and he only uses it for his business, he can instantly write off its full cost as a deduction in his 2024–25 income year tax return.
End of exampleEligibility
The instant asset write-off eligibility criteria and limit have changed over time. You need to:
- check your business's eligibility against the conditions below
- apply the relevant limit amount.
The income year in which you may claim an instant asset write-off depends on when the asset was purchased, first used or installed ready for use.
Eligibility conditions
Eligibility, and the year in which you may use the instant asset write-off to claim an immediate deduction for an asset depends on:
- your aggregated turnover – this is the annual turnover of your business and that of any business entities that are your affiliates or connected with you
- the date you purchased the asset
- when it was first used or installed ready for use
- the cost of the asset being less than the limit.
Limits
The instant asset write-off limits have changed over recent years. Make sure you have checked the eligibility criteria for your business.
|
Date range for when asset first used or installed ready for use |
Limit |
|---|---|
|
1 July 2023 to 30 June 2026 |
$20,000 |
|
12 March 2020 to 30 June 2021, providing the asset was purchased on or after 7:30 pm (AEST) on 12 May 2015 and by 31 December 2020 (see note). |
$150,000 |
|
On or after 7:30 pm (AEDT) on 2 April 2019 to 11 March 2020 |
$30,000 |
|
29 January 2019 to before 7:30 pm (AEDT) on 2 April 2019 |
$25,000 |
|
1 July 2016 to 28 January 2019 |
$20,000 |
Note: For the 2020–21, 2021–22 and 2022–23 income years, temporary full expensing may be available.
|
Aggregated turnover |
Date range for when asset first used or installed ready for use |
Limit |
|---|---|---|
|
Less than $50 million |
On or after 7:30 pm (AEDT) on 2 April 2019 to 11 March 2020 |
$30,000 |
|
Less than $500 million |
12 March 2020 to 30 June 2021 providing the asset was purchased on or after 7:30 pm (AEST) on 2 April 2019 and by 31 December 2020 |
$150,000 |
If the cost of asset exceeds limit
If you are a small business, you must use the simplified depreciation rules to claim the instant asset write-off.
If you use the simplified depreciation rules and the cost of the asset is the same as or more than the relevant instant asset write-off limit, the asset must be placed into the small business pool.
Example 2: exceeding the limit
Daryl owns a small electrical business, Daryl’s Electrical, which has an aggregated turnover of less than $10 million. On 28 July 2024, Daryl purchases a ute for $40,000. He estimates he will use the ute 40% of the time for his business.
Even though the cost of the ute to the business is $16,000 ($40,000 × 40%), Daryl can't use the instant asset write-off as the total cost of the ute ($40,000) exceeds the relevant limit of $20,000.
Instead, Daryl can add the $16,000 business portion of the ute's cost to the small business pool for Daryl’s Electrical.
End of exampleExclusions and limits
A car limit applies to the cost of passenger vehicles.
There are also a small number of assets that are excluded.
Car limit
The car limit does not apply to:
- vehicles that are not considered a passenger vehicle
- vehicles modified for use by people with disability.
For these vehicles you can claim the cost of the vehicle if it is less than the relevant limit amount.
A car limit does apply to the cost of passenger vehicles (except a motorcycle or similar vehicle) that are designed to carry fewer than 9 passengers and a load less than one tonne.
The one tonne capacity is the maximum load your vehicle can carry. This is also known as the payload capacity.
The payload capacity is the gross vehicle mass (GVM), as specified on the compliance plate by the manufacturer, reduced by the basic kerb weight of the vehicle.
The basic kerb weight is the weight of the vehicle with a full tank of fuel, oil and coolant, together with the spare wheel, tools (including jack) and factory-installed options. It doesn't include the weight of passengers, goods or accessories.
Payload capacity = GVM – basic kerb weight
You can't claim the excess cost over the car limit under any other depreciation rules.
Where the instant asset write-off limit is higher than the car limit for the relevant income year, it will be limited to the business portion of that car limit.
Example 3: purchase of a motor vehicle for business purposes – the effect of the car limit for depreciation
Asha and Raj own and run a small irrigation supplies business and they use the simplified depreciation rules. On 15 June 2024, the business purchased for $80,000 (including GST) a car that is designed to carry passengers. The car was delivered and ready for business use on 5 December 2024. The car was used 75% of the time for business purposes.
The car limit for the 2024–25 income year is $69,674. As such, the maximum amount Asha and Raj can claim for depreciation is $52,255 (75% of $69,674). However, they are not able to claim this amount under instant asset write-off, because the value of the vehicle ($80,000) is greater than the $20,000 Instant asset write-off limit for the 2024–25 income year. Instead, they add $52,255 to their small business pool, where it depreciates at 15% in the first year and 30% for each subsequent year.
Asha and Raj can't claim the balance of cost of the car ($27,745) under any other depreciation rules.
End of exampleHow GST applies
If your business is registered for GST and can claim the full GST credit, you exclude the GST amount you paid on the asset when calculating car depreciation amounts. If you are only able to claim a portion of the GST credit, then the cost is reduced by the portion you can claim.
For example, if a business is registered for GST and the vehicle cost is $75,000 including GST, the maximum GST credit that can be claimed is one-eleventh of the car limit. For the 2024–25 income year this is $69,674 ÷ 11 = $6,334. The balance ($75,000 − $6,334 = $68,666) is:
- less than the car limit of $69,674
- greater than the $20,000 Instant asset write off limit for the 2024–25 income year.
In this case, $68,666 would be added to the business's small business pool, where it depreciates at 15% for the 2024–25 income year and 30% for each subsequent year.
If your business is not registered for GST, you include the GST amount you paid on the asset in car depreciation calculations. For example, if a business is not registered for GST and purchased a vehicle costing $75,000 including GST, the maximum amount that can be added to their small business pool is the car limit ($69,674 in 2024–25).
Work out your deduction
The entire cost of the asset must be less than the relevant limit, not including any trade-in amount. Whether the limit is GST exclusive or inclusive depends on if you're registered for GST.
To work out the amount you can claim you must subtract any private use portion. The balance (that is the portion you use to earn assessable income) is generally the taxable purpose portion (business purpose portion).
While you can only claim the taxable purpose portion as a deduction, the entire cost of the asset must be less than the relevant limit.
Example 4: business and personal use of asset
On 18 November 2024, Fiona buys a new computer for $6,800 that she uses 80% of the time for her business as a sole trader. She also bought a new printer for $700 that she uses only for business purposes.
For the computer, Fiona calculates the business use portion that she can claim a deduction for under the instant asset write-off as $5,440 (80% of $6,800). For the printer, she can claim the entire cost of $700.
Fiona includes the combined amount of $6,140 in her tax return.
End of exampleResearch and development
The instant asset write-off also applies to research and development (R&D) use. When you work out the R&D tax offset amount for your R&D use you must subtract any non-R&D use, including the taxable purpose portion and private use portion.
If you are a small business and you have used your asset for R&D activities, you may not be able to claim the instant asset write-off for that asset and the normal depreciation rules will apply.
For more information, see: