The $20,000 instant asset write-off ends 30 June 2026
Corinne Kirk · Apr 14, 2026 · Accounting and Taxation
The instant asset write-off threshold drops from $20,000 to $1,000 on 1 July 2026 — unless the government legislates a further extension. For eligible small businesses with capital purchases planned, the window between now and 30 June is worth understanding clearly.
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 per cent 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 — the base threshold in the legislation — unless the government legislates a further extension.
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.
The threshold has been extended repeatedly since 2015. Whether it will be again is not known, and a purchase completed by 30 June does not depend on the answer.
Who is eligible?
To access the $20,000 instant asset write-off for 2025–26, a 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, and 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.
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, and vehicles subject to important conditions below.
What does not qualify includes assets not used for a taxable business purpose, certain intangible assets, and assets excluded under the simplified depreciation rules.
The vehicle rules
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 per cent 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. 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 rule is the one most often misread: 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.
Equipment ordered on 15 June and delivered on 5 July misses 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, leave adequate lead time for delivery, installation, and any setup required. An order placed in the second half of June leaves little margin.
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 is worth modelling your expected taxable position for the year with us. The IAWO is most powerful for profitable businesses that will benefit from an immediate deduction in the current year.
What about the general small business pool?
For assets costing $20,000 or more — which do not 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 per cent in the first income year and 30 per cent 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 us before year-end.
Corinne Kirk
Partner, Accountant
1300 102 542 | 0405 106 401
corinne@egu.au
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
This is general advice. It does not take account of your objectives, financial situation, or needs, and is not a substitute for advice that does. Before acting on anything in it, consider whether it suits your circumstances, and consider the relevant Product Disclosure Statement.