Instant Asset Write-Off (IAWO)

What is the Instant Asset Write-Off (IAWO)?

The $150,000 Instant Asset Write-Off is a scheme that provides businesses with an asset write-off. Assets must cost less than the instant asset write-off threshold and be purchased and used in the year that the write-off is claimed.

 

Background

Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed ready for use.

IAWO can be used for:

  • multiple assets, if the cost of each individual asset is less than the relevant threshold
  • new and second-hand assets.

The IAWO eligibility criteria and threshold have changed over time. You need to check your business’s eligibility and apply the correct threshold amount depending on when the asset was purchased, first used or installed ready for use.

 

Current temporary tax depreciation incentives

There are currently three temporary tax depreciation incentives available to eligible businesses:

  • Temporary full expensing
  • Increased instant asset write-off
  • Backing business investment

The IAWO does not apply for assets you start to hold, and first use (or have installed ready for use) for a taxable purpose, from 7.30pm (AEDT) on 6 October 2020 to 30 June 2022. You must immediately deduct the business portion of the asset’s cost under temporary full expensing.

If temporary full expensing does not apply or you are not eligible for it, you may still claim the depreciation deduction under IAWO if the asset was:

  • purchased by 31 December 2020, and
  • first used or installed ready for use before 30 June 2021.

For the 2019–20 and 2020–21 income years, eligible businesses may be able to deduct the cost of new depreciating assets at an accelerated rate using the backing business investment – accelerated depreciation rules.

 

Eligibility

To be eligible, you must:

  • have an aggregated turnover of less than $500 million

Assets must:

  • cost less than the instant asset write-off threshold
  • be purchased and used in the year the write-off is claimed

 

Timing

Applications open on an ongoing basis. 

 

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