After years of one-year extensions announced at the last minute, the $20,000 instant asset write-off is now a permanent part of the tax system from 1 July 2026. Announced in the May 2026 Budget, the measure has passed into law and the ATO has confirmed the details.
Who can use it
Businesses with an aggregated annual turnover under $10 million that use the simplified depreciation rules.
How it works
- You can immediately deduct the business-use portion of an eligible depreciating asset that costs less than $20,000.
- The limit applies per asset, so you can write off several assets in the same year as long as each is under $20,000.
- The asset must be first used, or installed ready for use, in the income year you claim it. Paying a deposit isn’t enough.
- If you’re registered for GST, the $20,000 test is on the GST-exclusive cost.
- Assets costing $20,000 or more go into the small business pool, depreciated at 15% in the first year and 30% after that. If the pool balance falls below $20,000 at year end, it can be written off too.
What it means for you
Because the threshold is now permanent, there’s no reason to rush a purchase before 30 June just in case the rules change. Buy equipment when your business needs it and your cashflow can support it.
A few reminders:
- A deduction isn’t a refund. A $10,000 laptop and software upgrade saves you tax at your marginal rate, not $10,000.
- Private use reduces the claim. Only the business-use portion can be written off, which matters for vehicles, phones and computers.
- Keep the invoice and a note of the date the asset was first used or installed.
Planning a purchase?
Talk to us before you buy. We can confirm eligibility, compare buying outright with financing or leasing, and work out the real after-tax cost.
This article is general information only and doesn’t take your circumstances into account. Speak to us before acting.
