Help Your Small Business Clients Maximise Their Instant Asset Write-Offs This EOFY
Tax time always brings a flurry of activities for small business owners and brokers; this year is no exception. For many, instant small business write-offs offer a golden opportunity to lower their tax bill while investing in their business.
Timing and strategy matter. That’s where you, as a broker, can step in. By helping your clients understand and maximise their instant asset write-offs, you can support their growth.
The current $20,000 tax-deductible expenses threshold can encourage machinery upgrades, equipment purchases and other investments without affecting taxable income.
This post explains small business write-offs, who is eligible and how brokers can help clients take full advantage of them this financial year.
Instant Asset Write-Off Defined
The instant asset or tax write-off allows small businesses to deduct expenses connected to the business portion of assets that cost less than $20,000. These are considered tax deductions.
Instead of spreading depreciation over several years, SMEs can write off the full amount as business expenses in the year the asset is first used or installed and ready for use.
And here’s the kicker—it applies per asset. Small businesses can claim multiple tax deductions if each claimed asset costs under $20,000.
Whether it’s a new laptop, updated equipment or specialty machinery, small businesses can immediately deduct the cost, which can significantly boost short-term cash flow.
This tax deduction rule is under the ATO’s simplified depreciation rules and can be claimed by businesses with an aggregated turnover of less than $10 million.
While the rules have changed over the years, the $20,000 threshold is locked in for the 2024–25 financial year, giving brokers a key talking point with clients looking to grow.
Instant Asset Write-Off Eligibility And Limits
To qualify for these specific small business tax deductions, a business must meet two main criteria with its business expenses:
- Aggregated turnover below $10 million
- Asset must cost less than $20,000 (excluding GST)
For the deduction to apply, the asset must be purchased, used or installed and ready for use in the same income year. It’s also essential to ensure the asset is being used for business purposes or that only the business-use portion is claimed in cases of mixed-use.
There’s been some back-and-forth on the policy, especially during and after the pandemic, when thresholds were temporarily higher. But for the financial year 2024–25, the Australian Taxation Office has confirmed the $20,000 cap.
Brokers may want to consider advising clients accordingly and keeping them updated on any future changes from the Federal Budget.
It’s worth noting that the business can’t claim tax deductions if an asset costs more than the threshold.
Instead, it must be depreciated through the small business pool. Understanding these nuances is key to helping clients avoid common mistakes.
How Brokers Can Help Their Small Business Clients Maximise Their Instant Asset Write-Offs
Small business write-offs can be powerful tools, but only if business owners use them correctly and on time.
However, many small business clients may not have the time, resources or tax know-how to take advantage of these concessions.
By offering practical guidance, reminders and strategic tax advice, you can help them maximise deductions while strengthening your client relationships.
Below are key areas where you can help clients maximise their tax deductibles before the financial year ends.
Review Small Business Pool Assets From The Previous Year
Before clients rush to purchase new equipment, it’s worth revisiting their existing small business asset pool.
If the closing balance of that pool from the previous income year is below $20,000, it can be written off in full—an often-overlooked opportunity for additional tax return deductions.
Brokers can consider helping their clients calculate previous assets sitting in the pool from earlier years. They can now be written off entirely under the simplified depreciation rules.
You may also want to assess whether combining new purchases with the pool might trigger a complete write-off for the total pool value.
This strategic review can be smart for businesses with lower-value remaining balances. This potentially offers more tax savings than claiming individual assets separately.
Advise Them To Incorporate Lead Time For Custom-Made Or Imported Equipment
While many assets can be picked up and used immediately, others—like imported machinery, commercial vehicles and specialty tools—have long lead times.
Under the ATO rules on small business write-offs, the asset must be installed and “ready for use” by 30 June to qualify for the tax deductions in that financial year.
As a broker, you may want to highlight this timing requirement to clients considering large or international purchases. Consider encouraging them to order early and build in extra weeks for shipping, vehicle expenses (delivery), installation and potential delays.
This advice is especially relevant in post-pandemic supply chains where unpredictable freight timelines are still common. Helping clients plan ahead can make the difference between making it for the small business write-offs this year or a missed deduction.
Any SME clients who need a bit more capital for equipment purchases can turn to small business loans to fund their business-related expenses.
Remind Them To Use Simplified Depreciation Rules
Small businesses should use the simplified depreciation rules to take advantage of small business write-offs. These rules are optional, but once adopted, they apply to all depreciating assets from that point forward.
If your client has not chosen this method and claimed a deduction before, now is the time to weigh the pros and cons.
If an asset is more expensive than the $20,000 cap, it falls under the small business pool and must be depreciated at 15% in the first year and 30% each year after.
While not as immediate as a full deduction, this still allows for accelerated depreciation compared to the general rules.
Your role here is to explain these depreciation options clearly and ensure your client is lodging their tax return correctly. You can also help compare scenarios where simplified depreciation would be more tax-effective.
Ensure Any Necessary Records Are Easily Recoverable
Documentation is everything when claiming small business tax deductions, and this is where brokers can potentially offer critical back-end support.
Clients must keep accurate records to prove that an asset purchase meets the instant tax write-off conditions. This includes evidence of:
- The purchase invoice showing the date, supplier and amount
- When the eligible asset was first installed and ready for use
- Proof of business use or allocation of mixed-use percentages
Brokers may want to encourage their clients to store these documents digitally in a system that’s easy to access. You can also suggest setting calendar reminders or using bookkeeping software to track asset-related entries throughout the year.
Having solid records doesn’t just help with claims. It can also protect your client in case of an ATO audit and help them comply with tax law.
Recommend Reviewing Any Second Element Costs
Many businesses may mistakenly think the asset cost ends with the purchase price. However, the ATO allows you to include second-element costs—additional expenses incurred to bring the asset to working condition.
These can include delivery fees, customs charges, software installation and even setup training costs. Consider any cost involved in getting an asset in an “installed, ready for use” condition.
You may want to help your clients review the full cost of their assets, including these second elements, to ensure they’re properly calculated. Why does this matter?
If these extra costs push the total asset value over $20,000, the item becomes ineligible for a tax-deductible and must be depreciated from the asset value instead.
Your guidance here may help prevent unexpected tax treatment and allow clients to split costs or defer certain elements to stay within the deduction limit.
Provide Records To Support Declaration Of Mixed-Use Assets
Not every asset is used exclusively for business and qualifies for business deductions. Many SMEs purchase multiple assets, such as smartphones, laptops or vehicles, for both personal and business use.
In these cases, SMEs can only deduct expenses related to the business-use portion. For example, you can only claim tax deductions for a portion of the use of a personal smartphone used to generate business income.
Brokers can again provide practical help here. Consider encouraging clients to track usage from day one and keep written logs or digital reports showing how often and for what purpose the asset is used.
A logbook or mileage tracker is critical for vehicles. For devices, usage stats or an industry-specific business-purpose declaration can help justify the claim.
Consider ensuring your clients understand that claiming the entire cost as 100% business use without proper records could trigger a red flag during an ATO review. Helping them get this right shows you’re not just a broker—you’re their business partner.
Conclusion
The instant asset write-off is one of the most useful tax tools available to small businesses, but only when used correctly. With the $20,000 threshold in place for 2024–25, now’s the time for brokers to step up.
Reviewing depreciation pools, advising on purchase timing and helping with documentation can give your clients a significant advantage this tax season.
It’s not just about checking off boxes on a checklist, it’s about building trust with your clients. It’s important to offer them value and advice that can assist them throughout the financial year.
So, try not to wait until June and consider starting these conversations now. It could potentially lead to a greater difference in your clients’ tax returns.
