Instant Asset Write-Off - What the New $20,000 Threshold Means for Your Business

The Australian Government’s Instant Asset Write-Off (IAWO) scheme has long been a valuable tax incentive for small businesses — and the updated $20,000 threshold opens new planning opportunities for both Aussie expats and offshore businesses entering the Australian market.

Whether you're running a business from abroad or establishing a foothold in Australia, understanding how to leverage this deduction can provide immediate tax relief and improve cash flow.

📌 What Is the Instant Asset Write-Off?

The Instant Asset Write-Off allows eligible small businesses to immediately deduct the full cost of depreciable assets up to a certain threshold in the year they are first used or installed.

With the latest update, the threshold has been reset to $20,000 per asset, applying to purchases made between 1 July 2023 and 30 June 2024.

✅ Who Is Eligible?

• Businesses with an aggregated turnover of less than $10 million

• Assets must be used or installed ready for use in the financial year the write-off is claimed

• Applies on a per-asset basis, meaning multiple assets under $20,000 each can be written off

🔍 Why This Matters for Expats & Offshore Businesses

At Worldwide Advisory, we specialise in advising Aussie expats and international businesses operating in or entering the Australian market. Here’s how this incentive fits within your broader tax strategy:

For Aussie Expats with Business Ties to Australia:

• If you're running a small Australian business from overseas, this write-off can reduce your local taxable income, improving cash flow while maintaining compliance with the ATO’s reporting requirements.

• Purchasing assets under the $20,000 cap can help manage capital gains tax (CGT) exposure if planning a future business exit or ceasing tax residency.

• If you’re returning to Australia, timing asset acquisitions to align with re-entry can provide upfront deductions against any new Australian-sourced income.

For Offshore Businesses Entering Australia:

• When setting up operations locally, this incentive supports early investment in essential equipment, technology, or business tools, reducing the financial burden of market entry.

• You can deduct these purchases immediately rather than depreciating them over several years — an advantage when navigating withholding tax, GST obligations, or transfer pricing documentation.

• Avoid triggering Permanent Establishment (PE) risks by structuring your purchases and business setup properly — our team can guide you through DTA use, director requirements, and Fair Work compliance.

💡 Real-World Example

An expat running a digital consultancy from Singapore purchases a $15,000 workstation and a $5,000 office setup for their Australian-registered company.

Result?

They can claim a $20,000 immediate deduction in that financial year, reducing their ATO-reported income and managing tax efficiently — all without the complexity of depreciating assets over time.

⚠️ Key Considerations

• Timing is critical – Assets must be in use or installed by 30 June 2024.

• Assets over $20,000 can still be depreciated under general small business pooling rules.

• Must ensure the purchase is genuinely business-related and properly documented to withstand ATO audit scrutiny, particularly for expats and cross-border operators.

📞 Ready to Make the Most of the $20K Write-Off?

Whether you’re an Aussie expat navigating your business tax obligations, or an offshore investor entering the Australian market, this incentive is a powerful opportunity — when used strategically.

Let us help you integrate it into a broader tax-efficient structure, while avoiding costly missteps.

Call us today at +61 7 3180 1684 or email us at contact@worldwideadvisory.au to get expert, personalised advise.