If you’re a small business owner planning to purchase new equipment, technology or other business assets, certainty around the tax treatment of those purchases can make budgeting and tax planning easier.
The Australian Government has now made the $20,000 instant asset write-off permanent for eligible small businesses. The change, announced in the 2026–27 Federal Budget, has passed Parliament and become law.
From 1 July 2026, eligible small businesses can claim an immediate deduction for eligible depreciating assets costing less than $20,000, provided the asset is first used, or installed ready for use, for a taxable purpose on or after that date.
What has changed?
The instant asset write-off threshold has been subject to temporary extensions and changes over recent years.
The $20,000 threshold was previously extended until 30 June 2026. Without the new legislation, the threshold would have reverted to $1,000 from 1 July 2026.
The new law makes the $20,000 instant asset write-off threshold permanent, providing greater certainty for small businesses when planning asset purchases and investments.
The measure is intended to encourage business investment and simplify tax planning by providing a more stable framework rather than relying on year-by-year legislative extensions.
Who is eligible for the $20,000 instant asset write-off?
The instant asset write-off is available to eligible small businesses that:
- Have an aggregated annual turnover of less than $10 million and satisfy the relevant turnover test; and
- Choose to apply the simplified depreciation rules.
If your business meets the eligibility requirements, the rules may allow you to immediately deduct the taxable-purpose portion of an eligible depreciating asset costing less than $20,000.
How does the instant asset write-off work?
Rather than claiming a deduction for an eligible asset over several years, an eligible small business can generally claim an immediate deduction for the taxable-purpose portion of the asset’s cost.
The $20,000 threshold applies on a per-asset basis. This means your business may be able to claim multiple eligible assets in the same income year, provided each individual asset costs less than $20,000 and all other eligibility requirements are satisfied.
Importantly, the asset must be first used, or installed ready for use, in the relevant income year before a deduction can be claimed.
The write-off may also apply to the first amount included in the second element of an eligible asset’s cost after the income year in which the asset was immediately deducted under the simplified depreciation rules, provided that amount is less than $20,000.
What assets can be claimed?
The instant asset write-off can apply to a wide range of new and second-hand depreciating assets used for business purposes, including:
- Computers and laptops
- Office furniture and fittings
- Tools and equipment
- Eligible machinery and equipment
- Some business vehicles, subject to the applicable car limits
Only the taxable-purpose portion of an asset can be claimed.
For example, if an asset is used partly for business and partly for private purposes, only the proportion relating to its taxable use will generally be deductible.
What if an asset costs $20,000 or more?
Assets costing $20,000 or more do not qualify for the immediate deduction under the simplified depreciation rules.
Instead, the business-use portion of the asset is generally allocated to the small business depreciation pool. The pool is depreciated at 15% in the income year in which the asset is allocated to the pool and 30% in each following income year.
Under the new measures, if the pool balance is less than $20,000 after the required year-end adjustments, your business may be able to immediately deduct the remaining balance.
Remember that the $20,000 threshold applies to the cost of each individual asset, rather than the total amount spent on multiple purchases.
Planning your next business asset purchase
The instant asset write-off can provide valuable tax benefits, but tax outcomes shouldn’t be the only consideration when deciding whether to purchase a business asset.
Before making a significant investment, consider:
- Your current and projected cash flow
- Financing and repayment arrangements
- The expected benefit and return from the asset
- Whether the asset will be used for business or private purposes
- When the asset will be first used or installed ready for use
- Whether your business satisfies the eligibility requirements
The permanent $20,000 threshold provides small businesses with greater certainty when planning future investments and budgeting for equipment and technology.
Need help with the instant asset write-off?
Understanding whether an asset qualifies for the $20,000 instant asset write-off can depend on your business structure, turnover, asset use and when the asset is first used or installed ready for use.
Before you make a significant asset purchase, talk to your advisor about whether the proposed asset purchase aligns with your business goals, and identify the tax deductions and depreciation benefits available to you under the current rules so you can maximise the tax benefits available to your business and make an informed decision.
Published 28 August 2026