Use It or Lose It: Why Small Businesses Must Act Before 30 June
For small businesses across Australia, the Instant Asset Write-Off (IAWO) is often the single biggest opportunity to slash their tax bill and reinvest cash back into the business. But for the 2024–2025 financial year, this incentive comes with a ticking clock and a massive risk of the benefit evaporating overnight.
Here is why every eligible business must expedite their capital expenditure plans and get assets in place before 30 June.
1. The Current Golden Window: $20,000 Per Asset
The Instant Asset Write-Off allows eligible businesses to claim an immediate, full tax deduction for the cost of certain assets, rather than depreciating them over several years.
- The Threshold: The current threshold is $20,000 per asset. This applies to the cost of each eligible depreciating asset the business acquires.
- Who Qualifies? This incentive is available to small businesses with an aggregated annual turnover of less than $10 million.
- What Qualifies? The write-off applies to both new and second-hand assets. This could include anything from vehicles and machinery to computers, printers, high-end office furniture, or even the costs of improvements made to existing assets, provided the improvement cost is also under $20,000.
Claiming the IAWO immediately brings forward the tax benefit, effectively reducing your taxable profit for the current year and boosting your cash flow right away.
2. The Critical Legislative Risk
The reason for the urgency is rooted in the law itself: the current $20,000 threshold is temporary, and its extension for FY2025 is pending final legislation.
The Threat of Reversion: If the current temporary measure is not formally passed into law or extended beyond 30 June 2025, the threshold will automatically snap back to just $1,000 per asset from 1 July 2025.
This means a business buying a $19,000 piece of equipment in June 2025 could deduct the entire $19,000 immediately, but buying the exact same item in July 2025 might only allow them to deduct the first $1,000 upfront (with the rest depreciated over several years), resulting in a much smaller immediate tax benefit.
3. The “Installed Ready for Use” Test
Simply ordering an asset or paying a deposit before 30 June is not enough to secure the deduction in this financial year.
To be eligible for the IAWO in your 2025 tax return, the asset must be either:
- First Used for a taxable purpose, or
- Installed Ready for Use by 30 June 2025.
Example: If a medical practice orders a piece of diagnostic equipment in May, but it is not delivered and operational until July 1, the immediate deduction will be missed for the current financial year.
Businesses must plan their acquisitions carefully, factoring in supplier lead times, delivery, and installation to ensure the asset is functional and genuinely “ready for use” on or before the EOFY deadline.
Your Instant Asset Write-Off Checklist
To maximise this powerful tax incentive, small business owners should take these critical steps now:
- Review Capital Needs: Look at your projected growth and list all necessary capital expenditure (machinery, vehicles, IT upgrades) that costs less than $20,000 per unit.
- Expedite Acquisition: Place orders and arrange delivery and installation immediately. Do not delay these purchases until the new financial year begins.
- Verify the Ready Test: Ensure the asset is physically on-site and operational by 30 June. Take photos and keep delivery dockets to prove the installation date if necessary.
- Confirm Eligibility: Make sure your business still meets the aggregated turnover threshold of under $10 million.
By acting decisively before 30 June, you can lock in significant upfront tax relief and protect your business against the anticipated drop in the IAWO threshold next financial year.