(28 March 2025 – Australia) SMEs seeking to take advantage of the A$20,000 instant asset write-off threshold have until 30 June to acquire and install new or replacement assets after the popular policy was wound back in the latest 2025 Federal Budget.
Forming a key component of many small businesses capital expenditure plans, the Labor government’s decision not to extend the scheme for another year is unwelcome news given the limited opportunity to take advantage of the Australian Taxation Office (ATO) tax deduction for the cost of an asset in the next three months.
“The failure to continue the instant asset write-off scheme in the budget is 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” stated Australian Industry Group CEO Innes Willox.
“The uncertainty created by the Budget decision will deliver a capital expenditure headache for thousands of SMEs who were planning to invest in productivity boosting assets. Businesses have come to rely on the write-off rules in recent years to help upgrade or replace essential assets like vehicles and trailers, computers and printers, and power tools and equipment” commented ScotPac CEO, Jon Sutton.
“New data from ScotPac’s SME Growth Index Report found that 59 percent of Australia’s SMEs are planning to invest in their businesses in the six months to August 2025. However, the instant asset write-off change in the Budget will throw those plans into jeopardy, particularly when SMEs are already feeling the cash flow pinch of higher wages, superannuation and other compliance costs.”
Previous research executed by East & Partners on behalf of ScotPac following the reduction in the instant asset write-off cap to A$20,000 from July 2023 found the expenditure plans of 61 percent of SMEs were immediately impacted. A further 20 percent said they would delay investment by 6-12 months.
“We urge SME owners and operators to sit down with their key advisors and reassess their capital expenditure plans and priorities in the wake of this week’s Budget. SMEs planning major asset purchases should carefully consider all available funding solutions so they don’t miss a critical investment opportunity” Mr Sutton added.
“ScotPac has been supporting Australian businesses and their brokers to plan and fund essential asset purchases for more than 35 years. We take pride in delivering the certainty and confidence business owners need when it comes to making capital investment decisions.”
What is the instant asset write-off scheme?
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 A$20,000 threshold applied to small businesses with an annual turnover of A$10 million for assets first used or installed ready to use between 1 July 2024 and 30 June 2025.
The proposed A$20,000 limit applies on a per asset basis, so small businesses could instantly write off multiple assets. The A$20,000 boost was not yet legislated for the current financial year.
Prior to the pandemic, the threshold stood at A$30,000 for firms with less than A$50 million annual turnover. During the pandemic, the threshold jumped sharply to A$150,000 for firms with turnover less than A$500 million as a vital stimulus measure.