Changes to instant asset write-off scheme from 1st July 2023

By Warren Strybosch

Have you thought about purchasing another asset for your business, but you are unsure if you should or not? Is there any benefit in doing so before 1st July 2023?

Here we try to explain what the changes are and whether or not you should consider purchasing an asset before 1st July 2023.

In summary, here are the changes:

• Temporary full expensing will end 30 June 2023.

• From 1 July 2023 to 30 June 2024, the instant asset write off threshold will be $20,000 per asset.

On Budget night we heard that the Instant asset write-off measure would end this financial year. From 1 July, it will revert to the previous instant asset write off scheme, but with a higher threshold.

Rather than dropping immediately to $1,000, the threshold will be $20,000 per

Scheme/Initiative Benefit

asset until 30 June 2024, which means that eligible businesses with revenue under $10 million will be able to write off the full value of eligible assets up to $20,000 that are first used or are installed ready for use during FY 2023-24. With the threshold applying per asset rather than per business, multiple assets up to $20,000 that meet the criteria can be written off immediately.

Time to talk

It might be time to talk to your accountant about any changes that might be coming, and how they will impact capital asset plans in our business.

Those planning to take advantage of temporary full expensing need to do so before EOFY, with the asset installed and ready for use. Those considering purchases early in the new FY may consider bringing those plans forward to take advantage of the scheme, but cash flow impacts need to form part of the decision.

Asset eligibility

Other business owners who plan to invest in assets up to $20,000 in the next FY and take advantage of the instant asset write off should not count on the temporary measure extending beyond 30 June 2024 – the assets must be ready for use by that date.

It could be better to wait

Those businesses considering assets that are eligible for the Small Business Energy Incentive may consider waiting until after EOFY regardless of the end of temporary full expensing.

Eligible businesses will be able to claim a bonus tax deduction of 20% for spending on assets that supports electrification and energy efficiency that are installed during FY24 with a maximum claimable expenditure of $100,000.

This sets a ceiling of $20,000 as the maximum bonus tax deduction.

Business eligibility

Eligibility period

Instant asset write off

Immediately deduct the full cost of eligible assets.

Small Business Energy Incentive

Bonus tax deduction iof 20% of spending on eligible assets or upgrades

Assets must not cost more than $20,000 per asset. Multiple assets can be claimed.

Must support electrification or energy efficiency. Up to $100,000 of total expenditure.

Sources: Instant asset write off | Small Business Energy Incentive

Aggregated turnover of less than $10 million.

Must be first used or installed ready for use in FY24.

Annual turnover of less than $50 million.

Must be first used or installed ready for use in FY24.