ATO warning as $20,000 tax break scrapped: ‘Alarming'

Yahoo

26-03-2025

The popular $20,000 instant asset write-off scheme has not been extended for another year in the Federal Budget. Experts said it will come as a huge hit for Aussie small businesses and means they only have 'limited opportunity' to take advantage of the Australian Taxation Office (ATO) tax break.
The instant asset write-off limit was temporarily increased from $1,000 to $20,000 over the last two budgets, however, the measure had not yet become law. The boost allowed small businesses to deduct the full cost of eligible assets costing less than $20,000.
H&R Block director of tax communications Mark Chapman said it was 'unexpected bad news' for small businesses.
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'The instant asset write-off is ending at its current level on 30 June 2025 and will revert to $1,000 from 1 July 2025,' he said.
'This means that small businesses have a very limited opportunity to take advantage over the next three months, assuming the government can get its $20,000 threshold through Parliament.'
Australian Industry Group chief executive Innes Willox said the failure to continue the instant asset write-off scheme in the budget was 'alarming'.'The instant asset write-off program operating now has still not been legislated and the uncertainty this causes, as well as new concerns about its future, create significant uncertainty for businesses,' he said.
Australian Chamber of Commerce and Industry CEO Andrew McKellar has argued the extension should be legislated permanently.
'The instant asset write-off could help to underpin investment and productivity in the small business sector,' he said.
'It should be made a permanent feature of the tax system for investments worth up to $50,000 and available to businesses with an annual turnover of up to $50 million.'
Businesses can use the instant asset write-off to claim an immediate deduction for the cost of an asset, rather than depreciate them over time.
The boosted $20,000 threshold applied to small businesses with an annual turnover of $10 million for assets first used or installed ready to use between July 1, 2024 and June 30, 2025.
The proposed $20,000 limit applied on a per asset basis, so small businesses could instantly write off multiple assets.
The $20,000 boost was not yet legislated for the current financial year.
The budget included an extension of the energy bill relief scheme for households and around one million small businesses.
From July 1, a further $150 energy bill rebate will be automatically applied to electricity bills in quarterly $75 instalments. This will extend the scheme until the end of the year.
Workers will also receive additional tax cuts in 2026 and 2027, with the tax rate for the lowest tax bracket to be cut from 16 to 14 per cent.
Those on the average income of $79,000, will see an additional tax cut of $268 per year when the rate is 15 per cent in 2026 and $536 a year when the rate is 14 per cent.
The government has also flagged abolishing non-compete clauses for workers earning less than $175,000.Sign in to access your portfolio