Instant Asset Write-Off 2026: What You Can Claim

The instant asset write-off lets a small business deduct the full cost of an eligible asset in the year it is first used, instead of depreciating it over several years. For 2025 to 26 the threshold is $20,000 per asset, GST exclusive, for businesses with aggregated turnover under $10 million. The rule that decides your claim is not the invoice date. It is the date the asset was first used, or installed ready for use, for a taxable purpose.

What the instant asset write-off actually does

Normally, a business asset is depreciated over its effective life. A $15,000 piece of equipment might be deducted over five or ten years. Under the instant asset write-off, the full business portion comes off your taxable income in the year the asset is first used, which improves cash flow and reduces tax in that year.

It is a timing benefit, not a permanent discount. You still pay tax on the profit the asset helps generate. You simply claim the cost sooner.

The threshold and the dates

Income year	Threshold per asset	Eligibility	Status
2025 to 26, 1 July 2025 to 30 June 2026	$20,000	Aggregated turnover under $10 million	Enacted in law
2026 to 27 onwards	$20,000 proposed	Aggregated turnover under $10 million	Announced in the 12 May 2026 Budget as a permanent $20,000 limit. Confirm the enacted position before relying on it.

The ATO’s $20,000 instant asset write-off page is the primary source and should be checked again before any large purchase. If the announced permanent extension does not pass in its current form, the default threshold from 1 July 2026 is $1,000.

Who qualifies

• Businesses with aggregated turnover below $10 million for the income year
• Businesses using the simplified depreciation rules for small business
• Assets first used, or installed ready for use, in the relevant income year
• Assets used for a taxable purpose, with the business use portion claimed

Aggregated turnover includes the turnover of connected entities and affiliates, not just the trading company. If you operate through several entities, confirm the group figure rather than assuming the entity figure is the test.

What you can claim

Asset	Usually eligible	Watch out for
Tools and equipment	Yes, if under the threshold and used in the business	Private use portion must be excluded
Laptops, monitors, phones	Yes	Apportion if used personally
Office furniture and fit out	Yes, for removable items	Leasehold improvements may be treated differently
Vehicles, including utes	Yes, if under the threshold	Car limit applies to cars; private use must be apportioned
Second hand assets	Yes, if the other criteria are met	Keep the purchase evidence
Software and digital assets	Often yes	Subscriptions are usually a running expense, not an asset

What you cannot claim

• Assets costing the threshold or more. The test is “less than”, so exactly $20,000 does not qualify.
• Assets not used, or not installed ready for use, by 30 June.
• The private portion of a mixed use asset.
• Capital works such as building extensions, which are dealt with under separate rules.
• Trading stock, which is deducted when sold rather than capitalised.
• An asset that has been split or invoiced in parts to get under the threshold.

The “first used or installed ready for use” rule

This is the rule that catches most businesses. An asset ordered in June but delivered in July belongs to the following income year. An asset delivered in June but not commissioned until July is also a grey area and usually belongs to the later year.

If the deduction matters to this year’s return, the asset has to be in use, or installed and ready for use, before 30 June. Plan the delivery and installation, not just the payment.

What happens above the threshold

An asset that costs more than the threshold is not lost. Under the simplified depreciation rules it goes into the small business pool, which is depreciated at 15% in the first year and 30% in later years on the declining balance. The pool balance itself can be written off when it falls below the threshold.

A $25,000 item bought in 2025 to 26 would typically add $25,000 to the pool, giving a first year deduction of $3,750 at 15%, rather than a full $25,000 deduction. That difference is why the threshold matters.

GST and second hand purchases

If you are registered for GST, the threshold uses the GST exclusive cost. A $21,450 purchase including GST has a GST exclusive cost of $19,500 and can qualify. If you are not registered for GST, the full price is used.

Second hand assets can qualify. Keep the invoice, the date of first use and evidence of the business use percentage. If you later sell a fully written off asset, the proceeds are generally assessable income, which is a point our capital gains tax guide for small business covers in more detail.

How to claim it

1. Confirm your aggregated turnover for the year.
2. Check the asset cost is below the threshold, GST exclusive.
3. Confirm the date first used or installed ready for use.
4. Work out the business use percentage and exclude the private portion.
5. Record the asset in your depreciation schedule or fixed asset register.
6. Claim the deduction in the correct label of your return, and keep the evidence for at least five years.

If the asset is also used privately, the claim must be apportioned. A $18,000 ute used 80% for business supports a claim on $14,400, not $18,000. Our guide to tax deductions for small business covers the apportionment rules that sit around this concession.

Frequently asked questions

What is the instant asset write-off limit for 2025 to 26?

$20,000 per asset, GST exclusive, for businesses with aggregated turnover under $10 million. The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026.

Is the $20,000 threshold permanent?

The 12 May 2026 Budget announced it would become a permanent $20,000 limit from 1 July 2026. Confirm the enacted position before relying on it. If the measure does not pass, the default threshold is $1,000.

Can I claim a ute under the instant asset write-off?

Yes, if the ute costs less than the threshold and is first used in the relevant year. The car limit applies to cars, and private use must be apportioned.

Can I claim more than one asset?

Yes. The limit applies per asset, not in total. You can claim several assets in the same year, provided each one is under the threshold and eligible.

Does GST count towards the threshold?

If you are GST registered, the threshold uses the GST exclusive cost. If you are not registered, the full purchase price is used.

What if the asset is delivered after 30 June?

It generally belongs to the following income year. The test is when it was first used or installed ready for use, not when it was ordered or paid for.

Can I claim second hand equipment?

Yes, if it meets the same eligibility tests and you keep the purchase evidence and the date of first use.

Buy on the rules, not the deadline

The write-off is only worth chasing if you needed the asset. Buying equipment in June to save tax is a cash decision, not a tax decision, and the cash usually matters more.

If you are planning a purchase above a few thousand dollars this year, talk to us before you commit. We will confirm the threshold that applies, the date the asset must be in use, and how the claim interacts with your end of year tax position. Our business accounting service maintains the depreciation schedule behind every claim, and the ATO’s instant asset write-off guidance is the source to check for the current rules.