Reminder about instant asset write-off for equipment and vehicles

Business management

As the end of financial year approaches, remember that you may be able to claim the full cost of certain types of assets.

The 2020-2021 Federal Budget extended the instant asset write-off scheme to 30 June 2023. It is called 'temporary full expensing'.

If your business is eligible, you can use the scheme to claim an immediate deduction for the full cost of depreciating assets such as vehicles and equipment. As well as reducing your taxable income by a larger amount for the year in which you make the claim, instant asset write-off makes your accounting simpler by doing away with annual depreciation deductions.

There are some rules about eligibility so if you are considering buying an asset and claiming the instant write-off, we recommend you talk to your accountant first.

The scheme applies to most types of depreciating assets such as

  • Tools
  • IT hardware
  • Office and shop furniture, lighting, and fittings
  • Air conditioners
  • Office cars (up to the value of $150,000 and subject to instant asset write-off rules)

However, be aware that some assets are excluded.

How it works

  • You must have an active business with an ABN
  • Businesses with an aggregated income of up to $5 billion can only claim for new assets
  • If your business has an aggregated annual income under $50 million, you may also claim the full cost of eligible second-hand assets
  • You must acquire the assets after 6 October 2020 and install them ready for use by 30 June 2023
  • You can make your deduction claim in the tax year in which the equipment is used or installed
  • You can borrow funds to purchase the equipment
  • If you buy an asset for both business and personal use, you can only claim the percentage of its value that is used for business

For more information

See the Australian Taxation Office information about temporary full expensing.