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How the $20,000 instant asset write-off benefits small to medium enterprises in Australia

The right technology applied in the right manner across your business, is one of the most important investments in time and money that you can make.

This article outlines how eligible businesses can assess the $20,000.00 instant asset write-off and what technology related investments may be eligible.

What is the $20,000 instant asset write-off scheme?

It is a significant tax incentive introduced by the Australian government. The scheme is designed to support small to medium enterprises (SMEs) by allowing them to immediately deduct the cost of eligible business assets (including technology related expenses). This initiative offers multiple benefits that can help SMEs grow, innovate, and enhance their operational efficiency.

On 14 May 2024, as part of the 2024–25 Budget, the government announced it will continue to improve cash flow and reduce compliance costs for small businesses by extending the $20,000 instant asset write-off by a further 12 months until 30 June 2025.

Who is the scheme for?

Businesses with an annual turnover of less than $10 million are allowed to access the $20,000 instant asset write-off. It is a powerful tool for managing cash flow and reducing taxable income as this deduction can be claimed in the same year the asset is first used or installed.

Businesses must meet the following criteria to qualify for the $20,000 instant asset write-off:

  1. Use the asset in their business operations within the same financial year.
  2. Have an aggregated turnover of less than $10 million.
  3. Ensure each asset purchased is under the $20,000 threshold.

What technology related expenses are eligible?

For those businesses wishing to invest in their technology stack the following expenses are eligible:

  • Tangible items like IT hardware.
  • Intangible assets such as software and website development costs.

Are you looking to maximise the technology investments you are making in your business? Reach out to one of our team to find out about how we can assist you on your digital transformation journey. Please reach out to your accountant or accounts team to ensure compliance.

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