The $20,000 Instant Asset Write-Off Is Being Scrapped: What’s Next for Your Business?
- Marketing Manager
- 3 days ago
- 3 min read
Updated: 3 days ago
Big news from the Federal Budget— the $20,000 instant asset write-off is officially going away after this financial year (FY2025)
Instead of being able to instantly write off up to $20,000 in business purchases, the new cap for the 2025-26 financial year will drop to just $1,000.
That’s a pretty significant change, and it’s something every small business owner needs to be prepared for. So, what does this mean for you, and how can you plan ahead?
How the instant asset write-off Helped Your Business
For years, the $20,000 instant asset write-off was a game-changer for small businesses. It allowed owners to deduct the full cost of items like computers, office equipment, and vehicles right away, rather than depreciating those costs over several years.
This simple incentive made it easier to invest in your business without taking a big hit to your cash flow.
Catarina Santini, a registered tax agent, sums it up:
“For many SMEs, the $20,000 write-off was an essential tool. It made growth and reinvestment easier, allowing businesses to upgrade their assets without waiting years for depreciation.”
But now, with the $20,000 write-off gone, it’s time to rethink your business strategy. You’ll need to find new ways to manage your investments, or at least be more strategic about what you spend money on.
Need help navigating these changes? Book a Call to get started!
Should You Rush to Buy Before June 30?
With the deadline fast approaching, it’s tempting to rush out and purchase new assets—whether it’s upgrading your tech, buying a new vehicle, or refreshing your office equipment—before the $20,000 write-off disappears.
While the 2024-25 write-off is still in place, you don’t want to make any snap decisions without carefully considering your options.
Tax agent Stacey Price offers some solid advice:
“Before rushing into purchases, small business owners need to fully understand their current tax position. Will buying those assets impact your cash flow or tax situation in a way that will hurt you later?”
The decision isn’t black and white. Sure, you might get some immediate tax relief, but you also need to evaluate whether those purchases are truly necessary and how they fit into your long-term business plans.
Don’t Forget About Cash Flow and Strategy
Instead of focusing purely on asset purchases, now might be the time to focus on what really matters: cash flow.
As small businesses face more pressure from new regulations—like the payday super reforms and increased ATO scrutiny—the last thing you want is to drain your resources on unnecessary purchases.
Price emphasizes that managing cash flow is critical:
“Rather than rushing out to buy new assets, focus on your cash flow and make sure you’re financially prepared for the year ahead. It’s better to be in a strong position to weather future challenges than to be tied up with new purchases that don’t serve your long-term goals.”
The Road Ahead: What’s Next?
While the end of the $20,000 instant asset write-off might feel like a setback, it doesn’t mean the end of the road for your business.
In fact, it could be an opportunity to reassess your financial strategy and make sure you’re focusing on the areas of your business that will drive sustainable growth.
Instead of making quick purchases, take a moment to reflect on your priorities. Talk to your accountant, take a look at your cash flow, and make a plan that works for your long-term success.
With the right approach, your business can still thrive—write-off or not.
Need help navigating these changes?
Contact us at ProfitCloud today to talk to our experts about how we can help your business stay ahead of the curve and plan for future growth. Book a Call to get started!
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