If you run a small business and you have been holding off on a purchase because you were not sure whether the instant asset write-off would still be around, here is some good news. As of 1 July 2026, the $20,000 instant asset write-off is permanent. No more waiting each year to see whether the government extends it. Here is what that actually means, who qualifies, and how to use it without tripping over the fine print.
Normally, when you buy equipment for your business, you cannot claim the whole cost in one go. You depreciate it, claiming a slice of the cost each year over the asset's useful life. The instant asset write-off lets you skip that. If an asset qualifies, you claim the full cost as a deduction in the year you start using it, rather than spreading it out.
That is a cash flow benefit, not free money. We have written before about why a deduction is not a discount, and the same logic applies here: spending a dollar to save tax on that dollar still leaves you out of pocket. But bringing the deduction forward can genuinely help, especially if you were going to buy the thing anyway.
For years the threshold bounced around and relied on annual extensions, which made planning a headache. That changed with the Treasury Laws Amendment (Tax Reform No. 2) Act 2026, which received Royal Assent on 26 August 2026. From 1 July 2026, the $20,000 instant asset write-off is a permanent feature of the tax rules.
So for the 2026-27 income year and beyond, eligible small businesses can immediately deduct the full cost of assets that cost less than $20,000 each. The guessing game is over.
There are two main tests. First, your business needs an aggregated annual turnover of less than $10 million. Aggregated turnover means your own turnover plus that of any connected or affiliated businesses, not just the single entity. Second, you must be using the simplified depreciation rules for small business.
This is the part people miss. The $20,000 limit is per asset, not a total cap for the year. You can buy several qualifying assets, each costing less than $20,000, and write off every one of them in the same year. A $15,000 trailer and an $8,000 set of tools bought in the same year can both be claimed in full.
The figure you test against the $20,000 limit is the full cost of the asset before you apportion for any private use. If you are registered for GST, use the GST-exclusive cost, because you claim the GST back separately. If you are not registered, use the GST-inclusive cost. If you are unsure whether you need to register for GST, that changes which figure you work from.
Not sure whether a purchase qualifies, or whether it is worth bringing forward? Book a free call and we will give you a straight answer. Fixed fees agreed upfront, and every question answered within 24 hours, guaranteed.
If a single asset costs $20,000 or more, you cannot write it off immediately. It goes into your small business general pool instead. The pool is depreciated at 15% in the first year and 30% in each year after that.
There is a useful quirk worth knowing: if the balance of your pool drops below $20,000 at the end of an income year, you can write off the whole remaining balance that year. So the $20,000 threshold works at both ends.
The deduction is tied to when the asset is first used or installed ready for use for a business purpose, not when you order it or pay the invoice. Buying a machine in June but not taking delivery and setting it up until July pushes the deduction into the next income year. If the timing of a claim matters to your plans, that distinction is worth getting right before you commit.
To claim the write-off you need to show what you bought, when you bought it, what it cost, and that it is used in your business. Keep the invoice, and keep a note of the business use percentage if the asset is also used privately, such as a ute driven on weekends. This is the same record-keeping discipline that keeps you out of trouble on every other deduction you make.
The write-off reduces your taxable income, so its value depends on your marginal rate and on actually turning a profit. If your business made a loss, the deduction adds to the loss rather than handing you cash back.
Cars have a separate cap. The car limit for 2025-26 is $69,674, and even where a car costs less than that, a passenger vehicle will usually sit well above the $20,000 write-off threshold, so most cars end up in the pool rather than written off in full.
Second-hand assets count too, as long as they meet the same cost and use tests.
The instant asset write-off is now a permanent $20,000 per asset deduction for small businesses turning over under $10 million. That removes the annual uncertainty and lets you plan purchases around when your business actually needs the equipment, instead of racing a deadline that might vanish.
Weighing up an equipment purchase and want to know the real tax impact before you commit? Book a free call and get a clear answer, with a fixed fee quoted upfront.
This article is general information only and does not take your personal circumstances into account. Please seek advice specific to your situation before acting.
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