As part of the 2023–24 Federal Budget, an increase in the small business instant asset write-off threshold was announced to support small businesses. 

The Bill proposing to increase the instant asset write off threshold in Div 328 of ITAA 1997 has been passed by the Senate with amendments raising the threshold to $30,000 from the previously proposed $20,000 and the aggregated annual turnover eligibility from $10 million to $50 million.

The temporary full expensing (TFE) incentive, which was available to small and medium businesses with a turnover less than $5 billion, ended on 30 June 2023. This measure was announced to provide small and medium businesses relief from high inflation and other market volatility pressures. 

Eligibility criteria 

The following conditions must be satisfied in order to be eligible for the instant asset write-off: 

- The asset must be first installed or ready to use between 1 July 2023 and 30 June 2024 

- The asset must cost less than $30,000 

- The annual aggregated turnover of the business must be less than $50 million (s 328-110 ITAA 1997). 

The $30,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets. 

Compliance matters 

For the 2022–23 income year, as per the TFE rules, you can immediately deduct the business portion of an asset's cost, if you start to hold or have installed ready for use the asset for a taxable purpose before 30 June 2023 (no threshold applies to the cost of the asset).

Post the enactment of this measure, the cost (business portion) of any assets you purchase, start to hold, or have ready to use (installed) between 1 July 2023 to 30 June 2024 can be fully deducted if below the $20,000 threshold. This deduction may be claimed in your 2023– 2024 income tax return.

The amendments also extend deferral of the five year "lock-out" rule for the small business simplified depreciation rules to 30 June 2024, therefore you can continue to re-enter the simplified depreciation system if you choose to opt-out at some point before 30 June 2024.

Contact us 

We will keep you updated as this bill progresses through the parliamentary approval process. Please feel free to contact our office if you need more information about this proposed tax incentive.