Before the line is written off
Five checks, in the ATO’s terms
- The business is eligible. Eligibility turns on aggregated turnover, which counts your business and any affiliated or connected entities.
- It uses the simplified depreciation rules. A small business must apply them to claim the write-off, and must apply the whole set of rules, not just the write-off.
- The asset is not excluded. A small number of assets are excluded from the simplified rules, and the write-off can’t be used for them.
- The full cost is under the limit. The whole cost must be less than the limit, even though you claim only the business portion. With a trade-in, the full cost is the price before the trade-in credit.
- The dates fit. The year you claim depends on when the asset was bought and when it was first used or installed ready for use.
The write-off works for several assets at once, as long as each one costs less than the limit, and for second-hand assets as well as new.
The limit over time
The limit has moved before
The ATO warns that the eligibility criteria and the limit have changed over time, and that you need to apply the limit for the right dates. Its table for businesses with an aggregated turnover under $10 million, as read on 8 October 2026:
| Limit | When the asset was first used or installed ready for use |
|---|---|
| $20,000 | From 1 July 2023 onwards |
| $150,000 | From 12 March 2020 until 30 June 2021, for an asset bought between 7:30 pm AEST on 12 May 2015 and 31 December 2020 |
| $30,000 | From 7:30 pm AEDT on 2 April 2019 until 11 March 2020 |
| $25,000 | From 29 January 2019 until just before 7:30 pm AEDT on 2 April 2019 |
| $20,000 | From 1 July 2016 until 28 January 2019 |
For a register, the date column matters as much as the cost: the date an asset was first used or installed ready for use is what places it against a limit.
Worked example
Four items, one income year
Example only · made-up figures
A business with an aggregated turnover under $10 million uses the simplified depreciation rules. It buys four items and first uses them all in the same income year. Costs exclude GST. The rules applied are the ATO’s: a full cost under $20,000 is written off; a cost the same as or more than the limit goes into the small business pool, which deducts 15% in the first year and 30% each year after.
| Tag | Item | Full cost | Business use | Where it goes | Deduction this year |
|---|---|---|---|---|---|
| AR-0201 | Laptop | $3,200 | 100% | Written off this year | $3,200 |
| AR-0202 | Box trailer | $18,500 | 80% | Written off this year | $14,800 |
| AR-0203 | Pallet racking | $20,000 | 100% | Small business pool, 15% this year | $3,000 |
| AR-0204 | Forklift | $27,000 | 100% | Small business pool, 15% this year | $4,050 |
| Total deductions this year | $25,050 | ||||
The trailer. Only the business portion is deducted, $14,800, but the test is applied to the full $18,500, which is under the limit.
The racking. It costs exactly $20,000. That is not less than the limit, so it goes into the pool. The ATO’s wording is that an asset costing “the same as or more than” the limit must be placed in the small business pool.
The pool, a year later. The racking and the forklift share one pool. If nothing else enters it, it opens the next year at $39,950 (the $47,000 pooled, less $7,050). Thirty per cent of that is $11,985, leaving $27,965. The ATO adds that if the pool balance at the end of an income year, before that year’s deduction, is less than the write-off limit, the whole balance is deducted. In this example, with nothing else added and the limit unchanged, the balance would be $19,575.50 going into the fourth year, and that whole amount would be deducted then.
On the register
What the register keeps for a written-off asset
A written-off asset still gets a line. The ATO says that for simplified depreciation you must keep records, for 5 years, of how you worked out the opening pool balance, any change in how much you use an asset in the business, and any asset you dispose of.
The line also holds a later surprise. If you add to an asset you wrote off in an earlier year, such as a new part, the first such amount after that year can itself be written off if it is under the limit for the year it is claimed. That only works if the register shows which asset was written off, and when.
Assets used for research and development fall outside all of this: a small business can’t use the simplified rules, including the write-off, for an asset used for R&D activities.