Instant Asset Write-Off and Depreciation

The Instant Asset Write-Off (IAWO) has been one of the most generous business tax incentives of recent years, though the rules have changed multiple times. As of 2024–25, the threshold for the temporary full expensing measure has reverted to the previous small business depreciation pool rules for most entities. For small businesses (aggregated turnover under $10M): assets costing less than $20,000 (GST exclusive) can be immediately written off in the year of acquisition. Assets over $20,000 go into the small business pool and are depreciated at 15% in the year of acquisition, then 30% diminishing value per year thereafter. For medium businesses ($10M–$50M turnover): standard Division 40 depreciation applies at ATO effective life rates, but accelerated depreciation rules may apply depending on the relevant year's legislation. Check with your accountant for the current year's specific rules, as parliament has modified these provisions multiple times since COVID. Practical application for Darkice Interactive: Apple MacBooks, iPhones (development devices), servers, software licences, and office equipment all qualify. A $2,500 MacBook purchased by a company or trust with under $10M turnover can be written off immediately, generating a $2,500 tax deduction. At 25% company rate, that's a $625 immediate tax saving.

The Research and Development Tax Incentive is available to companies that develop new or improved software products. For small companies (aggregated turnover under $20M), the incentive provides a 43.5% refundable tax offset — meaning you can receive a cash refund even if your company has no tax liability. For larger companies, the offset is 38.5% non-refundable. Eligibility requires that the activity involves 'experimental activities whose outcomes cannot be known in advance using currently available knowledge.' For software development, this means: developing a new algorithm, testing a new approach to data processing, building novel integration between systems, or experimenting with a new technology approach. Standard software maintenance and incremental updates don't qualify, but genuine new product development typically does. For BathCheck and ShowerBuddy specifically, the development of novel assessment algorithms, machine learning features, or new integration capabilities would likely qualify. The claim is made in your company tax return and documented with an activities register and expenditure records. R&D specialist firms (Swanson Reed, Innovation Incentives) work on a contingency basis — you pay a percentage of the benefit you receive, so there's no out-of-pocket risk.