Short version: the instant asset write-off lets eligible small businesses claim the full cost of an asset in the year they start using it, instead of spreading the deduction over several years. The ATO currently sets the threshold at $20,000 per asset. It’s a deduction, not free money, so it only helps if you actually need the equipment and have taxable income to offset.
How it works
Normally, when you buy a work asset like a ute, compressor or trailer, you claim a share of its cost each year as depreciation. Under the instant asset write-off, an eligible business can claim the full cost, up to the threshold, in one year. The threshold applies per asset, so you can write off more than one if each is under the limit.
Who can use it
- Small businesses with an aggregated turnover below the ATO’s limit (currently under $10 million)
- Businesses using the simplified depreciation rules
- Assets first used or installed ready for use in the income year, and used for business
Rules, thresholds and dates have changed several times in recent years, so check the ATO website for the current position before you buy.
What tradies might claim
- Power tools and larger equipment under the threshold
- Compressors, generators and welding gear
- Trailers and some work vehicles (vehicle limits and business-use rules apply)
- Laptops, tablets and phones used for the business
- Workshop fit-out items that qualify as depreciating assets
Things that catch people out
- The asset must be used or installed ready for use by the end of the income year, not just paid for.
- Private use reduces your claim. If a ute is used 70% for work, you claim 70%.
- Cost limits on cars. Vehicles designed to carry fewer than nine passengers and under one tonne are subject to a car limit. Many utes with a higher payload are treated differently, but check with your accountant.
- It reduces tax, not cash. A $19,000 write-off might save a few thousand dollars in tax, but you’ve still spent $19,000.
- It doesn’t create a refund on its own. If you have no taxable income, the deduction may just create a loss to carry forward.
Buying with finance
You can generally use the write-off on financed equipment under a chattel mortgage or hire purchase, as long as you’re treated as the owner for tax. This can look attractive, but the repayments are still real, so don’t buy just for the deduction. See our equipment finance guide for how the options differ.
Should you buy before 30 June?
Only if you need the item. Buying something you don’t need to save tax means spending a dollar to save a fraction of one. If you were going to buy it anyway, timing the purchase so it’s installed and ready to use before the end of the financial year can bring the deduction forward.
Keep your records
Keep the invoice, proof of payment, the date you started using the asset and anything that shows business-use percentage. Good records also help at tax time. See our tax deductions checklist.
Questions for your accountant
- What’s the current threshold and does it apply to my business and structure?
- Will I have enough taxable income to use the deduction?
- How does private use or a car limit affect this specific purchase?
- Is it better to buy now or after 1 July?
Worked example: how much tax could you save?
This is an illustration. If you buy a $15,000 trailer for the business and you can write it off in full, your taxable income drops by $15,000. If your marginal tax rate is 32%, that could reduce your tax by roughly $4,800. You’ve still spent $15,000, so the net cost is about $10,200. The saving depends on your actual tax rate and income, so ask your accountant.
Assets above the threshold
If an asset costs more than the instant write-off threshold, you generally can’t write it off straight away. Small businesses using the simplified depreciation rules usually pool these assets and deduct a percentage each year. Check the current ATO rates, or ask your accountant how it works for your business.
Checklist before you buy
- Confirm the current threshold and your eligibility on the ATO website.
- Make sure the asset will be used or installed ready for use before the end of the income year.
- Check how much of the use is business and how much is private.
- Check your cash flow and whether you can cover the repayments.
- Keep the invoice, proof of payment and the date you started using it.
Instant asset write-off for tradies: FAQs
Can I use the instant asset write-off on a ute?
It depends on the vehicle, its cost and whether car limits apply. Many utes with a higher payload are treated differently from passenger cars, so check with your accountant.
Does the instant asset write-off apply to second-hand equipment?
It can, as long as the asset meets the eligibility rules, including the cost threshold and being used for business. Check the ATO guidance.
Do I get cash back from the instant asset write-off?
No. It reduces your taxable income, so you save tax, but you’ve still spent the money.
Can I write off an asset I bought on finance?
Often yes, if you’re treated as the owner for tax purposes, such as under a chattel mortgage or hire purchase. Confirm with your accountant.
Sources and further reading
General information only, not tax or financial advice. Thresholds and rules change, so check the ATO website and speak to a registered tax agent. We may earn a commission if you apply through links on this site, at no extra cost to you.