Quick answer
Small businesses with aggregated turnover under $10 million can immediately deduct the full cost of each eligible asset costing less than $20,000, in the year it's first used or installed ready for use. The ATO says the $20,000 instant asset write-off is permanent from 1 July 2026. It applies per asset, GST is excluded if you can claim the credit, and assets costing $20,000 or more go into the small business pool.
Key points
- $20,000 limit per asset, for businesses with aggregated turnover under $10 million.
- Permanent from 1 July 2026, according to the ATO.
- The asset must be first used or installed ready for use in the income year you claim.
- A deduction reduces tax; it doesn't refund the purchase price.
Every June, the instant asset write-off gets marketed as though equipment were suddenly free. It isn’t. It’s a genuinely useful tax rule that brings a deduction forward — and like any tax rule, it works best when it follows a sound business decision rather than driving one.
What is the instant asset write-off?
Rather than spreading the deduction for an asset across its working life, an eligible business claims the whole cost at once — in the income year the asset starts being used, or is installed and ready to use.
The key settings, according to the ATO:
| Setting | Rule |
|---|---|
| Who | Businesses with aggregated turnover under $10 million using simplified depreciation |
| Limit | Each asset must cost less than $20,000 |
| Timing | The income year the asset starts being used, or is installed and ready to use |
| Status | Permanent from 1 July 2026 |
| GST | Excluded from cost if you can claim a full GST credit |
| Larger assets | $20,000 or more go into the small business pool |
The limit is per asset. Three separate $15,000 assets can each be written off; one $45,000 asset can’t.
One practical point: the write-off is claimed when you lodge your tax return, so any tax saving arrives months after you’ve paid for the asset. Plan the cash for the purchase itself separately, and treat the lower tax bill as a later bonus rather than money you can spend now.
What does “permanent” change?
For years the threshold was set one year at a time, often confirmed late in the financial year. Owners were left guessing whether a purchase made in May would qualify. With the ATO confirming the $20,000 write-off is permanent from 1 July 2026, you can plan equipment purchases around business need rather than around a legislative deadline.
That’s good news — because the worst equipment decisions are the rushed ones made in the last week of June.
Why isn’t a tax deduction the same as free equipment?
Consider an illustrative company paying 25% tax that buys a $16,000 piece of equipment (GST excluded).
- Cash out: $16,000
- Deduction this year: $16,000
- Tax saved (at 25%): $4,000
- Net cost after tax: $12,000
The write-off saved $4,000 in tax this year — but the business still spent $16,000. If the equipment wasn’t needed, the business is $12,000 worse off than if it had done nothing. And if it was needed, the business would have claimed that deduction over time anyway; the write-off just brings it forward.
The rule: buy because the asset earns its keep, then enjoy the tax timing as a bonus.
How do you pay for the asset without draining cash?
Paying cash for an asset that will earn income over five years takes today’s working capital to fund years of future benefit. Alternatives:
- Finance where you own the asset, such as a chattel mortgage or a secured business loan. The asset produces income while you repay it, and ownership generally keeps the write-off available.
- A business line of credit for smaller items you’ll pay down quickly.
- Timing — buy when your cash flow forecast shows room, rather than when a sales promotion says so.
Your accountant should confirm how a particular finance arrangement affects the deduction. Enquire about funding for equipment — it takes about a minute and doesn’t involve a credit check.
What should you check before you buy?
- Does the business need it? Will it save time, add capacity or replace something failing?
- What’s the payback? How long until the extra revenue or savings cover the cost?
- Is it under $20,000 excluding GST (if you claim GST credits)?
- Will it be in use, or installed and ready to go, before 30 June if you want the deduction this year?
- Is it a passenger vehicle? If so, a separate car cost limit applies.
- How will you pay for it without squeezing wages, BAS or tax?
Our EOFY checklist places asset decisions alongside the other June tasks, and our guide on when to borrow looks at matching finance to an asset’s working life.
What records should you keep for written-off assets?
The deduction is only as good as the paperwork behind it. For each asset, keep:
- the tax invoice showing the cost and GST;
- evidence of when it went into service — a delivery docket, installation record or dated photo works well;
- how it’s used in the business, and any private use percentage;
- finance documents if it was purchased with finance;
- a note in your asset register, so it can be removed when sold or scrapped.
If you later sell a written-off asset, the sale proceeds generally need to be accounted for, so keep the register current. Your accountant will handle the detail at year end; your job is to hand over a clean file. Our EOFY checklist includes reviewing the asset register before 30 June.
Fund the asset, keep the buffer
The best equipment purchases pay for themselves. The right finance lets them do exactly that — from the income they generate — while your cash buffer stays intact for wages, tax and surprises.
We consider trading businesses for unsecured and equipment-related facilities typically from $5,000 to $500,000, and property-secured loans from $20,000 to $5,000,000 for larger fit-outs and fleets. Enquiring doesn’t touch your credit file, your details aren’t passed to other lenders, and a real person calls to understand what you’re buying and why. Please fill the form in accurately — the asset, the cost and your turnover — so we can match you properly the first time.
Frequently asked questions
Is the instant asset write-off permanent?
Yes. The ATO announced in September 2026 that from 1 July 2026 the $20,000 instant asset write-off is permanent for eligible small businesses with aggregated turnover under $10 million.
Is the $20,000 limit per asset or in total?
Per asset. The ATO says the write-off can be used for multiple assets as long as the cost of each individual asset is less than the limit.
Does the $20,000 include GST?
If you're registered for GST and can claim a full GST credit, you exclude the GST from the asset's cost. If you're not registered, the cost includes GST.
What happens to assets that cost $20,000 or more?
Under the simplified depreciation rules, assets costing the same as or more than the limit go into the small business pool and are depreciated over time rather than written off immediately.
Can I use the write-off on an asset bought with finance?
Generally, if you own the asset and it's used for business, how you paid for it doesn't stop you claiming. Lease arrangements where you don't own the asset are treated differently. Confirm the details with your accountant.
Do cars qualify?
Vehicles can qualify, but passenger vehicles are subject to a separate car cost limit. Check the ATO rules or ask your accountant before buying.