Small Enterprise Assistance – $20,000 Immediate Asset Deduction

The immediate asset deduction limit will temporarily rise from $1,000 to $20,000 for the 2023-24 and 2024-25 financial years.

On 9 May 2023, as part of the 2023-24 Budget, the Australian Government declared plans to enhance cash flow and decrease compliance expenses for small enterprises by temporarily raising the immediate asset deduction threshold to $20,000, effective from 1 July 2023 to 30 June 2024.

This measure has now been enacted.

Small businesses with combined turnover below $10 million can instantly deduct the entire cost of eligible assets priced under $20,000 that are first utilized or ready for use between 1 July 2023 and 30 June 2024.

Small businesses that have previously claimed an immediate deduction for an asset under simplified depreciation rules can also instantly deduct an amount included in the second element (cost addition) of that asset's cost, provided the amount:

• is the first second element cost incurred after the financial year in which the asset was written off

• is less than $20,000

• occurs between 1 July 2023 and 30 June 2024.

The $20,000 threshold applies per asset, allowing small businesses to immediately write off multiple assets.

Assets valued at $20,000 or more can still be placed in the small business simplified depreciation pool and depreciated at 15% in the first financial year and 30% each subsequent year. Additionally, pool balances under $20,000 at the end of the 2023-24 financial year can be written off.

Additional Information:

• Immediate asset deduction | Australian Taxation Office (ato.gov.au)

• The Treasury Laws Amendment (Support for Small Business and Charities and Other Measures) Act 2024

Small Business Immediate Asset Deduction Extension

On 14 May 2024, as part of the 2024-25 Budget, the government announced it will further improve cash flow and reduce compliance costs for small businesses by extending the $20,000 immediate asset deduction for an additional 12 months until 30 June 2025.

This measure is not yet law.

The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024, which includes the extension for the 2024-25 financial year, is currently under parliamentary consideration.

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