Working from home (WFH) has become the norm for many Australians, whether on a full-time or hybrid basis. While it offers flexibility and convenience, it also comes with important tax and compliance obligations — and getting it wrong can lead to penalties or missed deductions. This Fact Sheet outlines the key legal, tax and reporting responsibilities to be aware of when claiming working from home expenses, and how Indigo Financial can help.
DOWNLOAD FACT SHEET: Understanding Working from Home Obligations
The Australian Taxation Office (ATO) offers an instant asset write-off scheme, allowing eligible small businesses to immediately deduct the cost of certain assets. As of the 2024–25 financial year, businesses with an aggregated turnover of less than $10 million can claim an immediate deduction for assets costing less than $20,000, provided the asset is first used or installed ready for use between 1 July 2023 and 30 June 2025.
This measure is designed to improve cash flow and reduce compliance costs for small businesses by allowing them to instantly deduct the full cost of eligible assets, rather than depreciating them over several years. The $20,000 threshold applies on a per-asset basis, enabling businesses to claim multiple assets, each under the threshold.
However, the 2025–26 Federal Budget announced that the instant asset write-off threshold will revert to $1,000 from 1 July 2025, unless further legislative changes are made.
Despite the benefits, many small and medium-sized enterprises (SMEs) are not fully utilizing the instant asset write-off. A report by ScotPac found that 59% of SMEs planned to invest in their businesses in the six months to August 2025, but the uncertainty surrounding the write-off’s future has caused many to reconsider or delay their investment plans.
Several factors contribute to the underutilization of the instant asset write-off:
- Uncertainty and Legislative Delays: Frequent changes and delays in legislating the write-off thresholds create uncertainty, making it challenging for SMEs to plan their investments confidently.
- Cash Flow Constraints: Many SMEs face cash flow challenges, limiting their ability to make upfront investments, even with the promise of tax deductions.
- Lack of Awareness: Some business owners may not be fully aware of the eligibility criteria or the benefits of the instant asset write-off, leading to missed opportunities.
- Complexity of Tax Rules: Navigating the tax system and understanding the specific requirements of the write-off can be daunting, especially for businesses without dedicated financial advisors.
A recent online article by Rommel Lontayao in Mortgage Professional Australia suggested that only a small percentage of SMEs were actually accessing this opportunity…
Most SMEs missing out on tax deduction: study
OnDeck research shows only one in four small firms are claiming the instant asset write-off.
With the end of the financial year approaching, new research from OnDeck Australia indicates that a significant number of small businesses may be missing out on a valuable tax deduction.
According to the survey from the SME lender, only 26% of small enterprises nationwide are currently claiming the instant asset write-off (IAWO), a federal tax incentive designed to support small business investment.
The IAWO enables businesses with an annual turnover under $10 million to immediately deduct the cost of eligible assets costing up to $20,000, rather than spreading the deduction over several years.
Despite the potential tax benefits and improved cash flow, 36% of businesses said they are not using the deduction, while another 38% were unsure whether they were accessing the scheme.
“This should be a wake-up call for the nation’s small business community,” said Cameron Poolman, Chief Executive of OnDeck Australia. “With only weeks remaining in the current financial year, there is still time for eligible businesses to make a strategic purchase and reduce their taxable income. But the asset must be in place by June 30 this year to claim the IAWO.”
Poolman said that the IAWO can support productivity by encouraging investment in business equipment such as tools, vehicles, and office supplies. It may also help firms expand their service offerings or upgrade customer-facing facilities.
“Moreover, the IAWO reduces a small business’s taxable income, driving a reduction in the company’s annual tax bill,” he said. “This can free up funds for investment in other areas of the business such as marketing, research, or staff development.”
OnDeck’s earlier research suggests that access to finance could play a role in increasing uptake, with 18.3% of small business owners saying they would use extra funding to upgrade assets or facilities.
“With only weeks to go before June 30, I encourage small businesses to speak with their tax adviser to understand if they would benefit from the IAWO in the current financial year,” Poolman said.
Contact Indigo Financial on (08) 8212 8585 if you need help understanding and planning your instant asset write-off before June 30, or any of your other accounting and taxation needs.
Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
As the end of the financial year approaches, smart business owners take time to plan. Year-end tax planning isn’t just about reducing tax – it’s about getting your business into the best possible financial position. Here’s a practical checklist to help small and medium businesses prepare for 30 June and make the most of available opportunities.
DOWNLOAD FACT SHEET: Year-end tax planning checklist v2
With the rise of flexible working arrangements, many professionals are working from home. It’s essential to understand which home office expenses are deductible and which are not, ensuring compliance with the Australian Taxation Office (ATO) guidelines.
DOWNLOAD FACT SHEET: Home office expenses – What’s allowed v5
Effectively managing motor vehicle expenses is crucial for small to medium businesses aiming to optimise tax deductions. The Australian Taxation Office (ATO) mandates precise record-keeping to substantiate claims. Understanding the logbook method and its requirements can help ensure compliance and maximise your eligible deductions.
DOWNLOAD FACT SHEET: Motor Vehicle Expenses – Logbooks and Claims v5
The Australian Government has announced that cheques will be phased out by 30 September 2029. This reform is part of a broader effort to modernise the payments system and reduce reliance on outdated, costly methods of transaction. Cheque usage has dropped by over 90% in the past decade, and digital alternatives now offer faster, more secure ways to pay.
DOWNLOAD FACT SHEET: Phasing out cheques by 2029 v1
The ATO has updated its small business benchmarks with the latest data taken from the 2022–23 financial year. These benchmarks cover 100 industries and allow small businesses to compare their performance, including turnover and expenses, against others in their industry.
While the ATO doesn’t use the benchmarks in isolation, small businesses who fall outside the ATO’s benchmarks are more likely to trigger a closer examination from the ATO. The ATO uses information reported in business tax return with key performance benchmarks for the relevant industry to identify potential tax risks.
Aside from determining the risk of unwanted attention from the ATO, the benchmarks can also be used to compare your business performance against other businesses in the same industry. The benchmarks could help you spot areas where you might be able to reduce costs or improve efficiency.
The small business benchmarks can be accessed here.
Aside from the small business benchmarks, the ATO also has a business viability assessment tool which can help business owners identify whether there are any obvious financial risks. The ATO consider a business to be viable if it is generating sufficient profits to meet commitments to creditors and provide a return to the business owners. If a business isn’t generating profits, the ATO looks at whether the business has sufficient cash reserves to sustain itself.
The business viability assessment tool can be found here.
Please let us know if you would like us to assist you benchmarking you business against others in your industry or review your business performance and make recommendations on ways that performance could be improved.
Contact Indigo Financial on (08) 8212 8585 for all your accounting needs.
Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
As the urban sprawl continues in most major Australian cities, we are often asked to advise on the tax treatment of subdivision projects. Before jumping in and committing to anything, it is important to understand the tax liabilities that might arise from these projects.
Unfortunately, many people make incorrect assumptions about the way that subdivision projects will be taxed, often believing that any tax exposure will be minimal. However, the reality is that there are a number of important issues that need to be considered and that could have a significant impact on the overall profitability of the project.
For example, when someone buys a property with the intention of subdividing it into smaller lots and selling them at a profit in the short term this will normally mean that any profit is taxed as ordinary income, rather than being taxed under the CGT rules. This means that the general CGT discount would not be available to reduce the tax liability, even if the property has been held for more than 12 months and it would not be possible to apply capital losses to reduce the taxable amount.
Also, in situations like this the sale of the subdivided lots will often trigger a GST liability, further reducing any after-tax profits generated from the project.
Many people fail to properly estimate the income tax and GST liabilities that will arise from property projects and can end up with a nasty shock when they realise the impact this has on the economic viability of the project.
The ATO has recently updated its guidance in this area, adding a number of new and practical examples to demonstrate how the tax rules will typically apply. The ATO’s examples cover the income tax and GST consequences of common property transactions such as property flipping, subdivision projects and property development activities.
For example, in one of the examples the ATO looks at a scenario where the taxpayer repeatedly buys, renovates, and sells properties. They engage in market research, seeking professional advice, taking out business loans, and then carrying out renovations in a business-like manner. The ATO takes the view that the taxpayer is running a business, since the taxpayer’s primary intention is to make a profit from the renovations and reselling of the property.
The profits are treated as ordinary income and taxed on revenue account. The CGT provisions don’t apply here since the property is held as trading stock. However, GST doesn’t apply on this particular situation as long as the properties have not undergone “substantial renovations”, which needs to be considered carefully.
On the other hand, in another example the ATO deals with a taxpayer who subdivides the vacant land from their main residence because of ill health and growing debt levels. Since they didn’t initially intend to profit from the subdivision and sale of the vacant land, the sale is viewed as the mere realisation of a capital asset rather than a business venture. The activities related to the subdivision are limited to necessary actions for council approval, reflecting a low level of complexity and small scale. The sale of the subdivided lot is taxed on capital account under the CGT rules, qualifying for the general CGT discount if the land has been held for more than 12 months. However, the main residence exemption cannot apply because the land is not being sold together with the dwelling that has been used as the taxpayer’s main residence.
Contact Indigo Financial on (08) 8212 8585 for all your accounting needs.
Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
It has been a long time coming, but the Government finally passed legislation increasing the instant asset write-off threshold for the year ending 30 June 2025 to $20,000. This was announced back in the 2024-25 Federal Budget but the Government faced a number of hurdles in terms of passing the legislation.
This basically means that individuals and entities who carry on a business with turnover of less than $10m can often claim an immediate deduction for the cost of depreciating assets (eg, plant and equipment) that are acquired during the 2025 financial year as long as the cost of the asset, ignoring GST credits that can be claimed, is less than $20,000.
If you are thinking about purchasing an asset before 30 June 2025 with the hope of claiming an immediate deduction, then please reach out to us to confirm the position. The rules contain a number of tricks and traps which we can help you to navigate.
Overview of the $20,000 Instant Asset Write-Off
The Australian Government has legislated a temporary increase in the instant asset write-off threshold from $1,000 to $20,000 for the 2024–25 income year. This measure aims to support small businesses by allowing them to immediately deduct the full cost of eligible assets, thereby improving cash flow and reducing compliance costs.
Key Details:
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Eligibility: Small businesses with an aggregated annual turnover of less than $10 million.
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Asset Threshold: The $20,000 limit applies on a per-asset basis, enabling businesses to write off multiple assets, each costing less than $20,000.
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Timeframe: Assets must be first used or installed ready for use between 1 July 2024 and 30 June 2025.
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Asset Types: Both new and second-hand depreciating assets are eligible.
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GST Consideration:
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If registered for GST and entitled to full input tax credits, the asset’s cost is considered exclusive of GST.
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If not registered for GST, the asset’s cost includes GST.
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Depreciation Pool: Assets costing $20,000 or more can be allocated to the small business depreciation pool and depreciated at:
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15% in the first income year.
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30% in subsequent years.
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Pool Balance Write-Off: If the balance of the small business pool is less than $20,000 at the end of the 2024–25 income year, the entire balance can be written off.
Important Considerations
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Car Limit: For passenger vehicles (excluding motorcycles) designed to carry less than one tonne and fewer than nine passengers, a car limit applies. For the 2024–25 income year, this limit is $69,674. If the vehicle’s cost exceeds this limit, the deduction is capped accordingly.
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Exclusions: Certain assets are excluded from the simplified depreciation rules, including:
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Assets leased out for more than 50% of the time.
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Horticultural plants.
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Software allocated to a software development pool.
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Capital works (e.g., buildings and structural improvements).
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Assets used in research and development activities.
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Private Use: Only the business-use portion of the asset’s cost is deductible. If an asset is used for both business and private purposes, the deduction must be apportioned accordingly.
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Record Keeping: Maintain accurate records of asset purchases, usage, and depreciation calculations to substantiate claims.
Post 30 June 2025
Unless further legislative changes are enacted, the instant asset write-off threshold is scheduled to revert to $1,000 from 1 July 2025. Businesses should plan asset acquisitions accordingly to maximize the benefits of the current threshold.
Contact Indigo Financial on (08) 8212 8585 for all your accounting needs.
Note: The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.
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