The $20,000 Asset Write-Off Ends 30 June - Why Now Is The Time To Act
There's a tax incentive that has quietly saved Australian small business owners thousands of dollars every year for the past decade - and it is about to change significantly. If your business has been considering purchasing equipment, technology, vehicles, or other assets, the next few months represent a genuine window of opportunity that closes on 30 June 2026.
After that date, the rules change. And the difference is not subtle.
What Is The Instant Asset Write-Off?
The instant asset write-off (IAWO) is a tax concession that allows eligible small businesses to immediately deduct the full cost of a qualifying asset in the financial year it is first used or installed - rather than depreciating it gradually over several years.
In practical terms, it means that if your business purchases a $15,000 piece of equipment in May 2026 and puts it into use before 30 June, you can claim the full $15,000 as a tax deduction on your 2025-26 return - rather than claiming, say, $2,250 this year and smaller amounts over the years that follow.
For a company taxed at the 25% base rate, a $15,000 immediate deduction represents a $3,750 tax saving in the current year rather than a much smaller benefit spread across multiple years. For sole traders in higher tax brackets, the benefit is even more significant.
The Critical Deadline: 30 June 2026
The current $20,000 threshold - extended by legislation passed in November 2025 - applies to eligible assets first used or installed ready for use between 1 July 2025 and 30 June 2026.
From 1 July 2026, the threshold reverts to $1,000 - unless the government legislates a further extension. That is not a typo. One thousand dollars. The original threshold from before the scheme was introduced in 2015.
At $1,000, the instant write-off becomes essentially irrelevant for any meaningful business purchase. A laptop, a power tool, a piece of office furniture - most things a small business actually buys cost more than $1,000. Without a further extension, those purchases go back into the depreciation pool, and business owners return to claiming small deductions over many years.
History suggests the government may extend it again - it has done so every year for the past decade. But history is not a guarantee, and waiting to find out means missing the certainty that exists right now.
Who Is Eligible?
To access the $20,000 instant asset write-off for 2025-26, your business must:
Be carrying on a business in the 2025-26 income year
Have an aggregated annual turnover of less than $10 million
Use the simplified depreciation rules
Have the asset first used or installed ready for use by 30 June 2026
The $20,000 limit applies per asset, not per business. This means a business can write off multiple eligible assets in the same financial year - each one under $20,000 - and claim an immediate deduction for all of them. There is no cap on the number of assets, provided each individual asset is below the threshold.
Both new and second-hand assets are eligible, which is worth noting for businesses considering used equipment purchases.
What Assets Qualify?
A broad range of business assets can qualify, including:
Tools and trade equipment
Computers, tablets, and office technology
Office furniture and fit-out items
Kitchen and hospitality equipment
Security systems
Machinery and manufacturing equipment
Vehicles (subject to important conditions - see below)
What does not qualify includes assets that are not used for a taxable business purpose, certain intangible assets, and assets excluded under the simplified depreciation rules.
The Vehicle Trap: Read This Carefully
Vehicles are one of the most common instant asset write-off claims - and also the most common source of mistakes. There are two important rules to understand:
The total cost rule. The $20,000 threshold applies to the total cost of the asset, not just the business-use portion. If you purchase a ute for $35,000 and use it 70% for business, the total purchase price ($35,000) exceeds $20,000 - so it cannot be immediately written off under the IAWO, even though the business-use portion is $24,500. It must instead go into the small business depreciation pool.
The car limit. For passenger vehicles - broadly, motor vehicles designed to carry fewer than nine passengers with a payload under one tonne - a separate car limit applies. For 2025-26, the car limit is $69,674. A passenger vehicle cannot be written off under the IAWO unless its total cost is under $20,000 (which is uncommon for most new vehicles).
Commercial vehicles such as utes and vans designed to carry loads are generally not subject to the car limit, but their total cost must still be below $20,000 to qualify for the IAWO.
The Most Important Rule: "First Used or Installed Ready for Use"
This is the rule that catches the most business owners off guard, and it is worth stating plainly: purchasing an asset before 30 June is not enough. The asset must be physically delivered, installed, and ready for use for a business purpose by 30 June 2026.
If you order equipment on 15 June and it arrives on 5 July - you have missed the window for this financial year. The deduction will fall into 2026-27, at which point the threshold is expected to revert to $1,000.
This has a practical implication: if you are planning to make a purchase, do it now. Leave adequate lead time for delivery, installation, and any setup required. Mid-June orders are risky. Late June orders are very risky.
A Note On Tax Losses
The instant asset write-off is a deduction against taxable income, not a cash refund. If your business is already operating at a loss or expects to make a loss this year, a larger deduction will not produce a short-term tax benefit - it will simply increase the tax loss carried forward to future years.
Before making a significant purchase primarily for tax reasons, it's worth modelling your expected taxable position for the year with your accountant. The IAWO is most powerful for profitable businesses that will genuinely benefit from an immediate deduction in the current year.
What About The General Small Business Pool?
For assets costing $20,000 or more - which don't qualify for the immediate write-off - small businesses using the simplified depreciation rules can still access favourable treatment through the general small business pool. Assets in the pool are depreciated at 15% in the first income year and 30% each year thereafter.
Additionally, if the closing balance of your general pool is below $20,000 at 30 June 2026, the entire pool balance can be written off immediately. This is worth reviewing with your accountant before year-end.
Act Now - Don't Wait
With less than three months until 30 June 2026, this is a genuine time-sensitive opportunity. If your business has been putting off a capital purchase - new equipment, technology, tools, or fit-out items - the case for acting before 30 June rather than after is compelling.
Before making any purchase, we'd recommend a quick conversation with the EGU team to confirm the asset qualifies, model the tax benefit against your expected income position, and ensure you have sufficient lead time for delivery and installation. That conversation could save you a meaningful amount of tax this financial year.
Warm regards,
Corinne Kirk | EGU Accounting and Taxation
Partner and Senior Accountant
1300 102 542 | 0405 106 401
corinne@egu.au | www.egu.au
GPO Box 1598 Brisbane QLD 4001
This is general advice and has been prepared without considering your objectives, financial situation, or needs. You should therefore consider the appropriateness of the advice, in light of your own objectives, financial situation, or needs, before following this advice. If the advice relates to the acquisition, or possible acquisition of a particular financial product, you should obtain a copy of, and consider, the Product Disclosure Statement (PDS) for that product before making any decision.
Sources
Australian Taxation Office — $20,000 instant asset write-off for 2025–26: https://www.ato.gov.au/businesses-and-organisations/small-business-newsroom/20000-instant-asset-write-off-for-2025-26
Australian Taxation Office — Small Business Support — $20,000 instant asset write-off: https://www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/small-business-support-20000-dollar-instant-asset-write-off
Moore Australia — Five Months to Maximise the $20,000 Instant Asset Write-Off (February 2026): https://www.moore-australia.com.au/news/five-months-to-maximise-the-20000-instant-asset-write-off-strategic-timing-for-small-business-investment/
Emu Money — Instant Asset Write-Off 2026: What's Changed, What It Means, and Why Timing Matters: https://emumoney.com.au/business/guides/eofy-tax-strategy/instant-asset-write-off-2026
Hayes Knight — $20k instant tax break for business passes the Senate … finally (November 2025): https://www.hayesknight.com.au/insights-and-updates/20k-instant-tax-break-for-business-passes-the-senate-finally
Nexia Australia — $20,000 instant asset write-off extension for small business entities: https://nexia.com.au/news/20000-instant-asset-write-off-extension-for-small-business-entities/