Tangible Personal Property Tax: Australian Rules & 2025 Updates

When most Australians think of property, real estate often springs to mind. But there’s a whole category of assets—tangible personal property—that lurks in homes, businesses, and investment portfolios, often overlooked until tax time rolls around. As the Australian Taxation Office (ATO) sharpens its focus on asset reporting in 2025, understanding what qualifies as tangible personal property and how it’s taxed is more important than ever.

What Is Tangible Personal Property?

Tangible personal property refers to physical items you can touch and move, as opposed to intangible assets like shares or intellectual property. Think of things like:

Jewellery, artwork, and collectibles
Machinery, tools, and vehicles
Household furnishings and electronics
Business inventory and equipment

In Australia, the ATO draws a line between personal use assets (such as your family’s car or TV) and those held for investment or business purposes. This distinction can have significant tax implications, particularly when it comes time to sell or dispose of the asset.

How Is Tangible Personal Property Taxed in 2025?

The tax treatment of tangible personal property depends on several factors: its use, value, and the circumstances of its acquisition and disposal. Here’s how the rules break down for 2025:

1. Capital Gains Tax (CGT)

Most tangible assets are subject to CGT when sold, but there are important exceptions:

Personal use assets—If you buy an item for personal enjoyment (such as a boat or camera) and it cost less than $10,000, any gain is CGT-exempt.
Collectables—Items like art, antiques, coins, and jewellery above $500 in value are subject to CGT. The $500 threshold hasn’t changed for 2025, but the ATO has signalled increased scrutiny of luxury asset sales.
Depreciating assets—Business-use items (like laptops or tools) that are depreciated for tax purposes are exempt from CGT, but any balancing adjustment on disposal may be taxable as ordinary income.

Example: If you sell a rare painting purchased for $6,000 in 2019 for $12,000 in 2025, the $6,000 gain is reportable and taxable as a capital gain.

2. Goods and Services Tax (GST)

Businesses registered for GST must include tangible personal property sales in their GST reporting, unless the asset was used solely for private purposes. Notably, the ATO’s 2025 compliance update targets under-reporting of GST on high-value business asset sales, especially vehicles and equipment.

GST generally applies when a business sells tangible personal property as part of its enterprise.
Private sales between individuals are usually GST-free, unless the seller is carrying on an enterprise.

3. Instant Asset Write-Off and Depreciation Changes

From 1 July 2024, the instant asset write-off threshold for small businesses is $20,000 per asset. This policy, continued into 2025, allows immediate deduction for tangible personal property purchases like tools, machinery, and some vehicles—provided the business has an aggregated turnover under $10 million. Assets over $20,000 must be depreciated over their effective life.

Example: A tradie purchasing a $15,000 trailer in 2025 can claim the full amount as a deduction under the instant asset write-off. But a $25,000 excavator would need to be depreciated over several years.

Common Tangible Personal Property Tax Traps

Whether you’re a collector, a small business owner, or simply decluttering, watch out for these traps:

Record keeping: The ATO is tightening requirements for substantiating the cost base and sale proceeds of tangible assets. Keep receipts and sale documentation for at least five years after disposal.
Mixing business and personal use: If an asset is used for both, you’ll need to apportion the gain or depreciation deduction accordingly.
Inherited assets: Special rules apply to assets acquired as part of a deceased estate, especially for CGT purposes. The cost base may be reset to market value at the date of inheritance.

What’s New for 2025?

The 2025 Federal Budget didn’t overhaul the treatment of tangible personal property, but it did fund new ATO technology for tracking asset sales via online marketplaces and auction houses. This means that casual sellers of collectibles, vehicles, and equipment could face more scrutiny if sales are under-reported.

Additionally, the government reaffirmed the $20,000 instant asset write-off and is considering further measures to encourage digital record keeping for business assets, with more details expected mid-year.

Conclusion: Don’t Let Tangible Assets Trip You Up

Tangible personal property may seem mundane, but it’s a tax area where details matter. With the ATO focusing on asset sales and instant asset write-off incentives in 2025, it pays to understand what’s reportable, deductible, or exempt. Whether you’re selling a family heirloom, upgrading business equipment, or investing in collectibles, keeping good records and understanding the rules can help you avoid nasty surprises at tax time.

Practical Examples of Tangible Personal Property Taxation

Understanding how tangible personal property is taxed can be complex. Here are some practical scenarios to illustrate the application of these rules:

Example 1: Selling a Vintage Car

Imagine you own a vintage car, purchased for $15,000 in 2010, which you decide to sell in 2025 for $30,000. Since the car was primarily used for personal enjoyment and exceeds the $10,000 threshold, the $15,000 gain is subject to Capital Gains Tax (CGT). However, if the car had been used for business purposes, you would need to apportion the gain accordingly.

Example 2: Business Equipment Disposal

Consider a small business owner who purchased a commercial oven for $18,000 in 2023. In 2025, the oven is sold for $10,000. Since the oven was depreciated as a business asset, the sale results in a balancing adjustment. The difference between the written-down value and the sale price is treated as ordinary income, potentially impacting taxable income for that year.

Strategies for Managing Tangible Personal Property

To effectively manage your tangible personal property and minimise tax liabilities, consider the following strategies:

Maintain Comprehensive Records

Documentation: Keep detailed records of the purchase price, date of acquisition, and any improvements made to the asset. This will help establish the cost base for CGT calculations.
Receipts and Invoices: Retain all relevant receipts and invoices for at least five years after the asset is sold or disposed of, as required by the ATO.

Use Tax Concessions Wisely

Instant Asset Write-Off: For small businesses, utilise the instant asset write-off for eligible purchases under $20,000 to maximise immediate tax deductions.
Depreciation Schedules: For assets exceeding the write-off threshold, ensure accurate depreciation schedules are maintained to optimise tax outcomes over the asset’s effective life.

Plan Asset Sales Strategically

Timing: Consider the timing of asset sales to align with lower income years, potentially reducing the tax impact of any gains.
Apportionment: If an asset is used for both personal and business purposes, accurately apportion usage to ensure correct tax treatment.

FAQ

What is the difference between personal use assets and business assets?

Personal use assets are items primarily held for personal enjoyment, such as a family car or personal jewellery. Business assets are used in the course of running a business, like machinery or office equipment. The distinction affects how these assets are taxed, particularly concerning CGT and depreciation.

Are there any exemptions for inherited tangible personal property?

Yes, inherited assets may have a cost base reset to their market value at the date of inheritance, impacting CGT calculations. It’s important to understand these rules to accurately report gains or losses upon disposal.

How does the ATO track asset sales?

The ATO employs advanced technology to track asset sales, particularly through online marketplaces and auction houses. This increased scrutiny means accurate reporting is crucial to avoid penalties.

Sources

For further insights and updates on tax strategies, visit our Cockatoo Tax Strategies page.

Worked Example

For example: compare two products with the same monthly cost but different fees. A slightly higher headline rate can still be cheaper once annual fees and penalties are included.

FAQ

How often should I review this type of product?

At least once per year and again when your circumstances change.

What should I compare first?

Start with eligibility, total costs, key exclusions, and cancellation terms.

Where can I verify guidance?

Check official Australian regulators and government websites before making decisions.