Small business owners will be pleased to know that at the ‘last minute’ the instant asset write-off level for the year ended 30 June 2024 was confirmed at $20,000.
This means, for eligible assets, a 100% tax deduction can be claimed for an asset purchased during that year. The asset must have been installed and ready for use by midnight on 30 June 2024.
There was confusion over whether the write-off level would be $30,000, $20,000 or $1,000. This was because the Senate in Canberra had sent the House of Representatives a message that it would only agree to a level of $30,000. The House of Representatives sent a message back to the Senate that it still wanted the $20,000 level that had been proposed and had been passed by the House of Representatives.
In the last sitting week for the Senate for the 2024 financial year, the Senate agreed not to push for the $30,000 level and passed the legislation that contained the $20,000 level. That was great news for small businesses because if the legislation had not been passed, the level would have reverted to $1,000 under existing law.
Year ending 30 June 2025
While on this topic, the Federal Government has introduced a Bill into Parliament that will (again) extend the instant asset write-off level to $20,000 for the year ending 30 June 2025. This, of course, must also be passed by the Senate and it will be interesting to see whether the Senate adopts the same position that the write-off level should be $30,000. We will have to wait and see.
Why does this keep happening?
You may righly ask why there needs to be legislation each year that extends the instant asset write-off? Why doesn’t the Government simply change the law to a particular level (say $20,000) and leave it there?
Technically, the instant asset write-off level is fixed at $1,000. This is the default level embedded in the legislation. However, for some years now successive Governments have introduced ‘transitional’ legislation that temporarily raises the level for one year (or a particular set periof). Once the transitional legislation expires, the level reverts back to $1,000.
If you were cynical, you might think that successive Governments are doing this because it enables them, each year, to make an announcement of the benefits thay providing to the small business community. But we wouldn’t want to be cynical, would we?
Contact KMT accountants now for your tax planning advice!
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This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek tax advice from a qualified accountant at KMT Partners. Information is current at the date of issue and may change.
