In a Budget boost for small businesses, the government has extended the instant asset write-off by another 12 months.

Businesses with an aggregated annual turnover of less than $10 million will continue to be able to immediately deduct eligible depreciating assets (which can be new or second-hand) costing less than $20,000, which are first used or installed ready for use by 30 June 2025.

The asset threshold applies on a per-asset basis, so businesses can instantly write off multiple assets.

The instant asset write-off is designed to improve cash flow and reduce compliance costs for businesses. The 12-month extension of the policy has been costed at $290 million.

The Australian Taxation Office (ATO) says businesses need to apply the simplified depreciation rules to claim the instant asset write-off. It cannot be used for assets that are excluded from those rules.

“The instant asset write-off 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,” according to the ATO.