How to claim assets after the end of the instant asset write-off scheme

How to claim assets after the end of the instant asset write-off scheme

For the last few years, business owners in Australia have benefited from temporary tax depreciation incentives. However, as of 30th June 2023, the scheme has finished, meaning it will take longer for businesses to claim the cost of buying a vehicle or large piece of equipment.

What were the temporary tax depreciation incentives?

In March 2020, the instant asset write-off scheme was introduced to help Australian businesses claim immediate deductions for assets. These deductions covered the business portion of the cost and were eligible for the year a business first installed or used the asset.

The point of the scheme was to support Australian businesses and encourage them to invest in new equipment, thereby supporting other businesses. While a business still had to pay the initial cost of the equipment, the scheme made it easy to claim money back on the investment quickly.

In October 2020, temporary full expensing was introduced. Temporary full expensing applied to larger assets and businesses, and provided flexibility as assets could be expensed on an asset-by-asset basis.

Small business support – $20,000 instant asset write-off

Although, medium and large businesses no longer have accelerated depreciation, it is not all bad for small businesses. Small businesses, with aggregated turnover of less than $10 million, will be able to immediately deduct the full cost of eligible assets costing less than $20,000 that are first used or installed ready for use between 1 July 2023 and 30 June 2024.

The $20,000 threshold will apply on a per asset basis, so small businesses can instantly write off multiple assets.

 Small Business Support – $20,000 instant asset write-off | Australian Taxation Office (

How to claim assets after the end of the temporary tax depreciation incentives

From 1st July 2023, two options exist for claiming the cost of new assets.

These two options are:

  • The general depreciation rules
  • Simpler depreciation for small businesses

The option your business uses will depend on the size and scale of your business, and the recommendations of your tax accountant.

General depreciation rules

 General depreciation rules are optional for small businesses and must be used by medium and large businesses. The general depreciation rules clarify the amount you can claim for a specific asset, based on its estimated lifespan.

The ATO has a list of effective life for specific assets, which can be found on its General Depreciation Rules page.

An asset’s depreciation rate can be calculated by either the prime cost method or the diminishing value method.

  • The prime cost method assumes that an asset’s value decreases uniformly throughout its lifetime.
  • The diminishing value method assumes that an asset’s value decreases more rapidly in its initial years of use.

The ATO calculates each method like this:

  • The prime cost method:

Asset’s cost × (days held ÷ 365) × (100% ÷ asset’s effective life)

  • The diminishing value method:

Base value × (days held ÷ 365) × (200% ÷ asset’s effective life)

While it’s helpful to know that these formulas exist, your accountant will let you know how to apply them in your tax return.

Simpler depreciation for small businesses

Simpler depreciation rules are available for small businesses with aggregated turnover of less than $10 million.

As per the ATO’s instructions, if you choose simpler depreciation rules, you must:

  • Use them to work out deductions for all your depreciating assets except those specifically excluded
  • Apply the entire set of rules, not just individual elements (such as the instant asset write-off)
  • Only claim a deduction for the portion of the asset used for business or other taxable purposes and not for the portion for private use

Get ready for your next tax return

If you are planning to purchase assets this year, it will help to know how you can claim back the costs so you can factor this into your budget. Reach out to our team for help understanding how depreciation now applies.

Need help with tax planning? Contact Crest Accountants today.

Disclaimer: The information contained in this news post is general in nature and is intended to provide a general summary only and should not be relied on as a substitute for professional advice. Whilst the information is considered to be true and correct at the date of publication, changes in circumstances after the time of publication may impact upon the accuracy of the information. 

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Crest Marketing

The Crest Accountants marketing team is a passionate group of individuals dedicated to crafting compelling content that informs, educates, and empowers businesses of all sizes. With a diverse range of accounting & finance expertise and backgrounds, our team combines creativity with strategic thinking to deliver valuable insights and resources for the business accounting space.
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