The $20,000 Instant Asset Write-Off Is Now Permanent
Good news for small businesses: the $20,000 instant asset write-off has now been made permanent.
From 1 July 2026, eligible small businesses can immediately deduct the business portion of eligible assets costing less than $20,000, rather than depreciating the cost over several years. The change is now law.
For business owners, this provides more certainty when planning equipment purchases and investing back into the business.
Who can use the $20,000 instant asset write-off?
The write-off is available to small businesses with an aggregated annual turnover of less than $10 million that use the simplified depreciation rules.
The asset also needs to be first used or installed ready for use in the income year in which you claim the deduction.
Both new and second-hand assets can potentially qualify.
The $20,000 threshold applies per asset
One important point is that the $20,000 limit applies to each individual asset, rather than being a total annual limit for the business.
That means an eligible business can potentially claim an immediate deduction for multiple assets during the same financial year, provided each individual asset meets the requirements and costs less than $20,000.
For example, a business purchasing several separate pieces of equipment costing less than $20,000 each may be able to claim each eligible purchase under the instant asset write-off.
What happens if an asset costs $20,000 or more?
Assets costing $20,000 or more aren't eligible for the immediate write-off under this measure.
Instead, eligible small businesses can continue to place these assets into the small business simplified depreciation pool. The ATO states these assets are generally depreciated at 15% in the first income year and 30% in subsequent income years.
If the balance of the small business pool is less than $20,000 at the end of an income year, the remaining balance can also be written off.
Remember: a write-off doesn't make the purchase free
An instant asset write-off is a tax deduction, not a reimbursement for the cost of an asset.
In simple terms, an eligible deduction reduces your taxable income. You still need to fund the original purchase, so it usually doesn't make sense to buy something purely to receive a tax deduction.
The decision should first make sense for your business, cash flow and future plans.
More certainty for small businesses
Previously, the $20,000 threshold had been extended for individual financial years. The new rules make the $20,000 threshold permanent from 1 July 2026, giving eligible small businesses greater certainty when considering future asset purchases.
Rather than rushing to make purchases simply because the end of the financial year is approaching, businesses can take a more considered approach to when and why they invest.
Thinking about purchasing an asset?
Before making a significant business purchase, it's worth considering whether the asset will qualify, when it needs to be ready for use and how the purchase fits into your wider tax and cash flow position.
If you're planning to invest in new equipment or business assets and want to understand how the $20,000 instant asset write-off may apply to you, speak with the team at Rise Accountants. We can help you look at the numbers before you make the purchase.
Note: Eligibility and tax treatment depend on your circumstances. The instant asset write-off forms part of the simplified depreciation rules and some assets are excluded from those rules.
Frequently Asked Questions
Is the $20,000 instant asset write-off permanent?
Yes. From 1 July 2026, the Australian Government has made the $20,000 instant asset write-off permanent for eligible small businesses. $20,000 Instant Asset Write-off - Australian Taxation Office
Who is eligible for the $20,000 instant asset write-off?
Generally, the measure applies to small businesses with an aggregated annual turnover of less than $10 million that use the simplified depreciation rules.
Is the $20,000 limit per asset or per year?
The threshold applies per asset, not as a total annual limit. This means an eligible business may be able to immediately deduct multiple assets in the same financial year, provided each asset costs less than $20,000 and meets the relevant requirements.
Can second-hand assets qualify?
Yes. The instant asset write-off can apply to both new and second-hand eligible assets.
What if an asset costs exactly $20,000?
The asset needs to cost less than $20,000 to qualify for the immediate deduction under this measure. Assets costing $20,000 or more can generally be placed into the small business simplified depreciation pool if the business is eligible.
When can I claim the deduction?
An eligible business can claim the deduction in the income year the asset is first used or installed ready for use.
Does the instant asset write-off mean I get $20,000 back?
No. The instant asset write-off is a tax deduction, not a $20,000 refund or rebate. It allows an eligible business to deduct the business portion of an eligible asset's cost rather than necessarily depreciating that amount over a number of years.
Should I buy an asset just to claim the tax deduction?
A tax deduction shouldn't be the only reason to make a purchase. Consider whether the asset is genuinely needed, how the purchase will affect your cash flow and whether it meets the eligibility requirements. If you're unsure, speak with your accountant before committing to a significant purchase.
