In recent years, the Instant Asset Write-Off has been one of the most popular tax planning tools for small and medium businesses across Australia. But as we settle into 2025, many business owners are asking the question: Is it still worth it?

The answer, as always with tax, is: It depends. Let’s take a closer look.

What is the Instant Asset Write-Off?

The Instant Asset Write-Off allows eligible businesses to immediately deduct the cost of an asset in the year it is first used or installed ready for use, rather than claiming deductions over several years through depreciation. It’s designed to encourage business investment and stimulate economic activity.

Over the past few years, especially during COVID-19 recovery efforts, thresholds for the write-off skyrocketed, and eligibility expanded significantly. However, changes introduced from 1 July 2023 and into 2024 have brought a return to more “normal” conditions.

What’s Changed in 2025?

As of 2025, here’s what you need to know:

• Thresholds: The threshold for eligible assets is now $20,000 (down from uncapped temporary full expensing rules that applied during the pandemic years).
• Eligible Businesses: Small businesses with an aggregated turnover of less than $10 million can access the scheme.
• Timing Matters: The asset must be first used, or installed ready for use, in the same income year you claim the deduction.

It’s important to check the specific dates and thresholds applying to your circumstances because the rules have shifted several times recently.

Is It Still Worth It?

For many small businesses, the answer is yes — but with some important considerations:

• Cash Flow vs Tax Benefit: While immediate tax deductions are attractive, it’s crucial not to let tax benefits drive poor purchasing decisions. Always ask yourself: Does the asset genuinely add value to my business?
• Strategic Investment: If you’re planning to upgrade essential equipment, vehicles, or technology, the Instant Asset Write-Off can make these investments more financially viable.
• Planning Ahead: With the lower $20,000 threshold, businesses need to be more deliberate in planning purchases to maximise deductions without overspending.

Tax Planning Tips for 2025

• Timing is Critical: If you’re considering an asset purchase, plan carefully to ensure it falls within the right financial year.
• Review Cash Flow: Don’t stretch your business financially just for the sake of a tax deduction.
• Seek Professional Advice: Each business is unique. A tax planning session with SKD Accountants can ensure you maximise deductions while staying in a healthy financial position.

The Instant Asset Write-Off remains a valuable tax tool for Australian small businesses in 2025. Smart, strategic planning is more important than ever.

If you’re unsure how the Instant Asset Write-Off fits into your broader tax strategy, or if you’d like personalised advice, get in touch with SKD Accountants today. We’re here to help you navigate the changing landscape and make the most of your opportunities.