If you’re a small business owner, you’ve probably heard the $20,000 instant asset write-off mentioned every year around tax time. Usually, this comes alongside some uncertainty about whether it would stick around.
That uncertainty is now over. In the 2026-27 Federal Budget handed down on 12 May, 2026, the government made the $20,000 threshold a permanent feature of the tax system, with no expiry date from 1 July 2026 onwards.
Here’s what it actually means, and how to work out if your business qualifies.
What Is The Instant Asset Write-Off?
The instant asset write-off lets eligible small businesses claim an immediate tax deduction for the full cost of an eligible depreciating asset, rather than spreading that deduction out over several years through standard depreciation. Instead of claiming a portion of an asset’s cost each year, you claim the whole thing in the year it’s first used or installed ready for use.
The threshold has moved around a fair bit since it was first introduced. This was originally lifted from $1,000 to $20,000 back in July 2023, then extended year on year while businesses waited to see whether it would be renewed. That annual guessing game is now behind us. From 1 July, 2026, the $20,000 threshold applies permanently, with no sunset clause.
Do You Qualify?
To use the instant asset write-off, your business generally needs to meet the following criteria:
- Aggregated annual turnover under $10 million: This is the main eligibility test. Aggregated turnover includes your business’s turnover plus that of any connected or affiliated entities.
- You use the simplified depreciation rules: If your business opted out of simplified depreciation in a prior income year, you lose eligibility for the write-off, even if you meet every other requirement. It’s worth checking your depreciation method before assuming you qualify.
- The asset costs less than $20,000: This applies on a per-asset basis, so a business can write off several separate assets in the same year, as long as each one individually comes in under the threshold. For GST-registered businesses, this is the cost excluding GST, so an asset priced at $19,999.99 ex-GST qualifies, but one that tips over that line does not.
- The asset is used or installed ready for use in the relevant income year: This is the condition that catches out a lot of business owners. Simply purchasing or ordering an asset isn’t enough. If it’s still in transit or awaiting installation at year-end, it doesn’t qualify for that income year, even if payment has already been made.
“One of the most common mistakes we see is a client assuming they can claim the deduction as soon as they’ve paid a deposit. If you buy a vehicle or a piece of equipment and it’s still being manufactured or shipped in from overseas, you can’t claim it until it’s installed and ready for use, even if you’ve already paid for it.” – Shane Borg, Director, Stones Sharp
What Counts As An Eligible Asset?
The write-off applies to eligible depreciating assets used in the course of running your business. This commonly includes things like tools and equipment, office furniture, computers and technology, and work vehicles (subject to the car limit for passenger vehicles).
It can also apply to the second element of an asset’s cost. This means later improvements or additions to an asset you’ve already written off are still eligible, provided that additional cost also falls under the $20,000 threshold.
Keep in mind that the deduction only covers the business-use portion of an asset. If an asset is used partly for private purposes, that private-use portion needs to be excluded from your claim.
What Happens to Assets Costing $20,000 or More?
If an asset costs $20,000 or more, it isn’t eligible for an instant write-off under the simplified rules. Instead, it gets allocated to your small business depreciation pool, where it’s depreciated at 15 per cent in the first income year and 30 per cent each year after that.
The same treatment applies if your general small business pool balance sits below $20,000 at year-end, in which case the whole pool balance can be written off immediately.
Why Permanency Matters
For years, small business owners and their accountants have had to keep one eye on the calendar and one eye on Parliament, waiting to find out whether the write-off would be extended before it lapsed back to the standard $1,000 threshold. That uncertainty made longer-term investment planning difficult, since a decision to upgrade equipment or vehicles might land in a year where the deduction was far less generous than expected.
With the threshold now permanent, business owners can plan asset purchases around what actually makes sense for their operations, rather than around Budget night. It also removes the annual scramble some businesses fell into each June, trying to finalise purchases before a deadline that may or may not have applied to them.
Getting the Timing Right
Even with the write-off now permanent, timing still matters within each income year. To claim the deduction in a particular financial year, the asset needs to be genuinely operational, not just purchased or ordered, by the end of that year.
If you’re planning a purchase close to 30 June in any given year, it pays to build in enough lead time for delivery and installation, rather than assuming the purchase date alone is enough.
Talk To Us Before You Buy
The instant asset write-off can be a genuinely useful tool for managing your tax position and reinvesting in your business. Still, eligibility depends on a few moving parts, your turnover, your depreciation method, and the specific asset and its cost.
If you’re planning an equipment upgrade, vehicle purchase, or technology investment and want to make sure it qualifies, get in touch with our team before you commit to the purchase. A quick conversation beforehand can save a lot of confusion at tax time.
