Time Running Out for Australians to Claim $20,000 Tax Benefit Before It Disappears

With only one day left before the June 30 deadline, small businesses and tradies in Australia have an urgent opportunity to take advantage of the $20,000 instant asset write-off before it is drastically reduced.

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Time Running Out for Australians to Claim $20,000 Tax Benefit Before It Disappears Image credit: Canva | en.Econostrum.info - Australia

As Australia approaches the end of the financial year, millions of small businesses and tradies (skilled workers like plumbers and electricians) are racing against the clock to claim the $20,000 instant asset write-off before it significantly drops in value. According to a recent article from Yahoo Finance, the policy, which has already been extended once, is set to conclude on June 30, 2025, unless another extension is passed. Without this extension, from July 1, businesses will only be able to claim a maximum of $1,000 for any qualifying asset, potentially leaving many small enterprises scrambling to make necessary investments. For now, time is running out for those who wish to take full advantage of this tax benefit.

What Is the Instant Asset Write-Off?

The instant asset write-off scheme has been a crucial tax relief measure for small businesses and sole traders across Australia. Essentially, it allows businesses with an annual turnover of less than $10 million to immediately deduct the cost of new assets purchased for their operations, as long as those assets are installed and ready for use within the same financial year. Under the current rules, businesses can deduct up to $20,000 per asset, and they can make multiple claims if they purchase several assets.

This program is particularly valuable for small enterprises that often operate on tight margins and need to upgrade equipment or make other significant investments to remain competitive. Tradies, for example, have used the program to buy expensive tools or replace aging equipment, which could enhance their productivity in the long term.

However, the current $20,000 threshold will be slashed to just $1,000 after June 30 unless the government passes another extension, as has been promised by the Labor Party. Without this extension, the maximum amount any business can claim for an asset will be drastically reduced, significantly impacting businesses that rely on this write-off to lower their taxable income and improve cash flow.

How to Take Advantage of the Write-Off Before It Ends

Small business owners and tradies are urged to act quickly to ensure they can take full advantage of the current $20,000 deduction. As Alex Molloy, co-founder of Valiant Finance, emphasized, “You must act… as assets need to be installed or ready to use before the new financial year starts.” This is particularly relevant for businesses that are considering larger investments, such as new machinery or vehicles, which may take longer to be installed or delivered.

The pressure is on for businesses to confirm eligibility and make their purchases before the window closes. It’s also important for them to double-check their eligibility with an accountant to ensure that they are making the most out of this tax benefit. As Molloy added, “Double-check eligibility with your accountant and consider the long-term return on investment of any major investment. This could slash your taxable income and improve cash flow heading into financial year 2025-26.”

This emphasis on long-term returns highlights the strategy behind the instant asset write-off—business owners aren’t just purchasing assets for the immediate benefit but are also positioning themselves to reduce their taxable income over several years, thereby helping their bottom line in the future.

Why the Scheme Matters for Small and Medium-Sized Enterprises

For small and medium-sized businesses, the ability to immediately write off the cost of assets can be a powerful financial tool. As Reece Ketu, head of group sales and distribution at Moneytech, pointed out, “Whether it’s replacing underperforming equipment, expanding your fleet, or improving productivity through new technology, asset finance can be a powerful tool when used proactively.” The scheme has proven particularly vital for businesses looking to replace outdated or inefficient equipment, which can often result in improved productivity and long-term savings.

The urgency surrounding this tax break stems from the looming deadline. “Time is running out to take advantage of this generous write-off before it effectively disappears,” Ketu warns. This situation leaves many businesses in a race against time, as they seek to purchase and install assets before the cutoff. For many small and medium-sized enterprises, this could be their final opportunity to maximize tax benefits while upgrading essential assets.

Moreover, the swift changes in the policy underline the volatility businesses face in tax planning. While the government has promised to extend the write-off for another year, the uncertainty of whether this will come to fruition adds an additional layer of pressure on business owners to act now rather than wait for a possible extension.

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