Small business – $20,000 Instant asset write-off
The Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025External Link has extended the $20,000 instant asset write-off limit to the 2024-25 income year. The measure aims to support small business entities with an aggregated annual turnover of less than $10 million.
Eligible small business entities can immediately deduct the business use portion of the cost of eligible depreciating assets costing less than $20,000. You must first use or install ready for use for a taxable purpose between 1 July 2024 and 30 June 2025.
The $20,000 limit applies on a per asset basis, so small business entities can instantly write off multiple assets. Small business entities can also immediately deduct an eligible amount included in the second element of a depreciating asset's cost.
The 5-year 'lock out' rule is suspended until 30 June 2025. This rule prevented small business entities from re-entering the simplified depreciation regime if they opted out.
If you're claiming a deduction under the instant asset write-off, complete P8 Expenses – label M and P10 Small business entity simplified depreciation – label A.
For more information, see Small business support – $20,000 instant asset write-off.
Debt deduction creation rules
The debt deduction creation rules (DDCR) were enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share – Integrity and Transparency) Act 2024.External Link The Act introduces the DDCR in Subdivision 820-EAA of the Income Tax Assessment Act 1997 (ITAA 1997).
For income years that commence on or after 1 July 2024, the DDCR operates to disallow related party debt deductions arising in relation to certain related party arrangements, including arrangements undertaken (entirely or partially) before 1 July 2024.
The DDCR applies to multinational businesses (that is, businesses operating in Australia and at least one other jurisdiction), including private businesses and privately owned groups.
The DDCR doesn't apply to:
- entities that, together with their associate entities, have $2 million or less of debt deductions for an income year
- securitisation vehicles
- certain special purpose entities
- Australian plantation forestry entities
- authorised deposit-taking institutions (ADIs).
For more information, see:
- Debt deduction creation rules and Division 7A
- Draft Practical Compliance Guideline PCG 2024/D3 Restructures and the new thin capitalisation and debt deduction creation rules - ATO compliance approach
- Draft Taxation Ruling TR 2024/D3 Income tax: aspects of the third party debt test in Subdivision 820-EAB of the Income Tax Assessment Act 1997.
Continue to: Instructions to complete the BPI schedule 2025
Return to: About the BPI instructions