End of the Instant Asset Write off as we know it

The recent Federal budget confirmed that the current tax depreciation provisions will end on 30 June 2023.

Since 6 October 2020 businesses with turnover of less than $5 billion per year have been able to claim a full tax deduction for any assets purchased, in the year they purchase them. There were some exclusions like building assets, primary production assets and some software assets.

This gave a significant cashflow incentive for businesses to acquire new assets.

Given the current inflationary environment, the Government has announced that these provisions will be ending on 30 June 2023.

From 1 July 2023 to 30 June 2024, small businesses (up to $10 million pa turnover) will be able to claim an instant deduction for assets of up to $20,000 and use accelerated depreciation via the small business pool for all other assets.

For business with turnover over $10 million pa, there are no generous depreciation rules available and every asset worth more than $300 will need to be capitalised and depreciated over its useful life.

Moral of the story – if you need to purchase any significant assets soon, try and have them purchased, installed and ready for use by 30 June 2023!