Tax-Write Offs: An Australian Business’s Basic Guide

Tax papers

For decades, the concept of tax write-offs is something that Australian businesses have had quite a bit of difficulty wrapping their heads around. From small mom-and-pop retailers to multinational corporations, the financial tool in question has maintained a sort of mystified aura because of all the different details involved. Unfortunately, this unfamiliarity has hindered companies from maximising tax write-offs to their advantage because a certain level of knowledge is required to utilise it as best as possible.

If you’re a business owner looking to alleviate your business’s costs, then the tool in question poses a valuable opportunity worth capitalising on. Fortunately, the experts at SMB Accounting have put this guide together on everything you need to know about tax write-offs so that you can get your optimisation efforts well underway:

What is a tax write-off?

Alternatively known as an instant asset write-off, tax write-offs allow eligible businesses to claim immediate deductions for the business-related portion of the costs of an asset. Generally, this particular privilege is made available in the year the investment is first used or installed ready for use.

When it comes to eligible usage, instant asset write-offs can be used for multiple assets as long as the cost of each individual purchase is less than the relevant threshold. Additionally, this same financial tool can be used for new and second-hand purchases. However, it is worth noting that tax write-offs cannot be used for assets that are excluded from the Australian Taxation Office’s simplified depreciation rules.

How do tax write-offs work?

While there are many simplified definitions for how the tool in question works, the best way to define a write-off is that it’s an expense that can be claimed as a tax deduction.

When you look at the functional aspects, the way tax write-offs work is that they’re deducted from a business’s total revenue to determine total taxable income. In full effect, this tool helps alleviate the incurred costs that businesses run into whenever they invest in specific items necessary for a business’s operations. However, it is important to note that once applied, these write-offs are meant for tax deduction purposes and not actual cost reimbursements!

Given the way they work, qualifying write-offs are now considered essential to running a business because of how instrumental they are in managing expenses and reducing overall costs. Although a write-off doesn’t need to be 100 per cent necessary, it’s vital that you consider it as a regular expense that helps run the business!

How do you qualify?

Among the different aspects of instant asset write-offs that businesses struggle with the most, the main facet that bears the most difficulty is the matter of qualification.

For starters, it is important to note that you will have to check your business’s eligibility and apply the correct threshold amount so that you can pinpoint the exact figures or cost components that you’ll write off. Additionally, using the tool in question also means that you’ll need to be mindful of when an asset was purchased, first used, or installed ready for use to certify its qualification or eligibility as a cost that can be written off.

Beyond qualifications, it is also important to understand that the instant write-off eligibility criteria and threshold have changed over time. In the context of the current COVID-19 situation, the Federal Government is expected to reinforce the availability of an instant asset write-off and increase its threshold from $30,000 to $150,000.


While the prospect of using an instant tax write-off or tax write-offs can be an intimidating idea at first, it’s important to know that the tool in question can be easy to work with once you consider the right points. By taking the above-mentioned pieces of knowledge into mind, you’ll be able to ensure that you provide your business with the means to stay ahead of the curve and reduce its tax expenses at all costs!

We’re a business accounting firm on the Sunshine Coast specialising in a number of financial services, including tax returns, audits, as company set-ups, and ongoing bookkeeping and accounting services that will help your business stay on top of its books. Get in touch with us today to see how we can keep you in financial shape!