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Guide to the $20,000 small business tax break

How to understand and use the $20,000 tax break to get the most out of it for your small business.

Elizabeth Barry
Elizabeth Barry

Last updated:

Keeping cash flow positive is essential to every business and making large, essential purchases can make that tricky. But the instant asset tax write-off offers a way for you to claim assets you purchase for your business up to a value of $20,000 this financial year rather than waiting until the following year.

First announced in 2015 and continuing through to 2019, this is a great way for small businesses to make essential purchases without needing to wait to claim. This guide will take you through everything you need to know about the $20,000 small business tax break.

What is the $20,000 instant tax write-off?

Small businesses that meet the eligibility criteria can purchase eligible assets up to a value of $20,000 and claim them this financial year. You just need to make the purchase before 30 June.

Is my business eligible to use it?

Your business needs to meet the following criteria to use the $20,000 instant tax write-off:

  • You had a turnover of less than $10 million

What assets can I write off?

The following assets are eligible for small businesses to write off:

  • The entire cost of the asset must be less than $20,000, not just the business-use portion and inclusive of GST
  • Can be new or used
  • The asset you purchased was first used or installed and ready to use in the income year you're claiming it in

Questions we've been asked about the $20,000 instant asset write-off

Can you buy a car with the $20,000 instant tax write-off?

Yes, you can purchase a business vehicle and claim it this financial year as long as it is less than $20,000.

What do I do with assets that cost more than $20,000?

You cannot immediately claim these assets and you will need to add these to your small business pool.

Can I claim depreciation on assets that I instantly write off?

No, you cannot claim depreciation in later years on assets that you immediately write off.

Can I instantly claim multiple assets?

Yes. You can claim multiple assets as long as they meet the criteria.

Picture: Shutterstock

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