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Just one-quarter of small businesses plan to take advantage of the instant asset write-off, OnDeck Australia research shows.
Almost three-quarters of small businesses could be set to miss out on the tax benefits of the instant asset write-off (IAWO) scheme, according to OnDeck Australia.
Despite the Labor government committing to extend the IAWO for another 12 months until July next year, just 26 per cent of small businesses said they plan to take advantage of the scheme, which allows businesses to immediately deduct the cost of assets under $20,000 rather than depreciating them over time.
Moreover, more than one-third (36 per cent) of small businesses admitted they were not making the most of the scheme and 38 per cent said they did not know if they were using it.
Small business lender OnDeck Australia’s research found 76 per cent of small businesses were confident about the business deductions they can claim, though 32 per cent relied on the advice of their accountant.
OnDeck Australia CEO Cameron Poolman urged small-business owners to act: “This should be a wake-up call for the nation’s small business community.
“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 30 June this year to claim the IAWO.
“This important tax break gives small businesses an immediate reward for investing in assets that can boost productivity – like vehicles, machinery, tools, and office equipment. It can also help businesses expand into new products or services, or enhance their customer experience and workplace appeal through renovations or fit-outs.
“Moreover, the IAWO reduces a small business’s taxable income, driving a reduction in the company’s annual tax bill. This can free up funds for investment in other areas of the business such as marketing, research, or staff development.”
After Labor’s decision not to reinstate the $20,000 IAWO in its federal budget for the financial year 2026, the party backtracked and extended the scheme for another year.
However, Labor has received backlash from some industry bodies for its decision to temporarily extend the scheme, with critics advocating a permanent and more substantial scheme to provide more stability.
The Commercial and Asset Finance Brokers Association of Australia (CAFBA) has said that expanding the scheme each year is only a “short-term sweetener”, calling for the scheme to be made permanent and significantly boosted to $150,000.
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