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$20,000 Instant Asset Write-Off 2026: Now Permanent — Everything Small Business Needs to Know
Part of the Federal Budget 2026-27 guide.
Is the $20,000 Instant Asset Write-Off Permanent from 2026?
Yes. The 2026-27 Federal Budget, delivered on 12 May 2026, permanently extended the $20,000 instant asset write-off for small businesses with an aggregated annual turnover of less than $10 million. From 1 July 2026, there is no expiry date on this measure. Eligible businesses can immediately deduct the full cost of assets costing under $20,000, purchased and first used (or installed ready for use) on or after 1 July 2026.
For years, the instant asset write-off was one of the most valuable — and most anxiously watched — measures in the annual Federal Budget. Small business owners would wait until Budget night each year to find out whether the write-off would be renewed, extended, or allowed to lapse. Accountants spent time every June warning clients about potential expiry dates. That annual uncertainty is now permanently resolved.
The government’s decision to make the $20,000 threshold a permanent feature of the tax system is one of the most practical wins in the 2026-27 Budget for the small business community, and the Australian Small Business and Family Enterprise Ombudsman has called it the measure small businesses had requested most consistently over the past five years.
What’s Changing: The Instant Asset Write-Off Is Now Permanent
Before this budget: The $20,000 instant asset write-off was temporary, renewed annually or in multi-year extensions. The most recent iteration had a legislated end date. Business owners were uncertain whether to make purchases ahead of the deadline or risk losing the benefit.
After this budget: The $20,000 threshold is now permanently legislated from 1 July 2026. There is no sunset clause. No renewal is required by future budgets. You can plan asset purchases with confidence.
What stays the same:
- The turnover threshold: businesses with aggregated annual turnover under $10 million are eligible
- The asset threshold: assets costing less than $20,000 per asset qualify
- Multiple assets: you can write off unlimited qualifying assets in the same income year
- The asset must be used or installed ready for use in that income year
When Does It Start?
The permanent instant asset write-off applies to assets purchased and first used or installed ready for use on or after 1 July 2026.
Assets purchased before 1 July 2026 are subject to the rules that applied during the 2025-26 income year. If you purchased assets in June 2026 specifically to claim the write-off, check with your accountant which year’s rules apply based on the date of purchase and the date the asset was actually available for use.
Who Is Eligible?
To access the $20,000 instant asset write-off from 1 July 2026, your business must meet all three of the following criteria:
1. Aggregated annual turnover under $10 million. Your aggregated turnover includes the combined turnover of your entity and any entities you are affiliated with or connected to. If you’re unsure whether related businesses affect your threshold, check with your adviser.
2. The asset costs less than $20,000 (GST-exclusive if you’re registered for GST).
- If your business is registered for GST, the $20,000 threshold is measured on the cost excluding GST, and any GST credit is claimed separately on your BAS.
- If your business is not registered for GST, the $20,000 threshold is measured on the total cost including any GST component.
An asset costing exactly $20,000 does not qualify — it must be less than $20,000. This can also apply to the second element of cost for later improvements to an existing depreciating asset, if that amount is under $20,000. An asset costing $19,999.99 (ex-GST for GST-registered businesses) qualifies, so the entire cost must stay below the threshold.
3. The asset is used (or installed ready for use) in the income year. You cannot claim the write-off simply by purchasing an asset before 30 June — the asset must be available for use. An asset on order or in transit as at 30 June does not qualify for that year.
What Assets Qualify?
The instant asset write-off applies to eligible depreciating assets used for a taxable purpose and for business purposes. Common qualifying assets include:
Tools and equipment:
- Power tools, hand tools
- Safety equipment and PPE
- Workshop equipment
- Hospitality equipment (coffee machines, fridges, benchtop appliances)
Technology:
- Computers, laptops, tablets
- Monitors and peripherals
- Phones and handsets
- Point-of-sale systems
Vehicles and transport (with important limits):
- Motorcycles and scooters (no separate car cost limit)
- Light commercial vehicles and utes are generally eligible; commercial vehicles over one tonne are generally exempt from the car limit
- Passenger vehicles (cars): The car limit applies to standard passenger cars designed to carry fewer than 9 passengers ($69,674 for 2025-26; check the ATO for the 2026-27 limit). For a car costing more than the car cost limit, only the depreciation on the car cost limit amount is deductible — not the full purchase price.
Fit-out and furnishings:
- Office furniture and desks
- Shelving and display fixtures
- Air conditioning and lighting units
- Signage
What does NOT qualify:
- Horticultural plants and primary production assets (different rules apply)
- Assets used 100% for private purposes
- Buildings and building improvements are excluded from the instant asset write-off
- Stock-in-trade (expensed as cost of goods, not depreciated)
- Assets costing $20,000 or more
Mixed Business/Private Use: The Important Caveat
Many business assets — particularly cars, phones and computers — are used partly for work and partly for personal purposes. The instant asset write-off is available on the business portion only, meaning only the business use portion can be claimed.
Example:
- Laptop purchase: $1,800 (ex-GST)
- Business use: 80%
- Claimable write-off: $1,800 × 80% = $1,440
In this example, the 80% work-related share is the only part eligible for an immediate deduction. Keep a usage log or have a reasonable basis for your business-use percentage. The ATO scrutinises claims for assets with obvious personal uses.
Worked Example: A Trade Business
Scenario: Hartley Electrical Services, a sole trader electrician. Annual turnover: $280,000. Registered for GST.
In the 2026-27 financial year, Hartley purchases the following assets:
| Asset | Cost (ex-GST) | Qualifies? |
|---|---|---|
| Electrician’s cable drum caddy | $890 | Yes |
| Thermal imaging camera | $3,200 | Yes |
| Laptop for quoting and invoicing | $1,950 | Yes (80% business use = $1,560) |
| Cordless drill set | $480 | Yes |
| Enclosed trailer for equipment | $14,800 | Yes |
| Commercial test and tagging station | $22,000 | No — exceeds $20,000 threshold |
Total instant write-off deductions: $890 + $3,200 + $1,560 + $480 + $14,800 = $20,930
The $22,000 test and tagging station must be depreciated under the normal diminishing value or prime cost method.
Tax saving (at 32.5% marginal rate for sole trader): $20,930 × 32.5% ≈ $6,802 in tax saved in this financial year alone, rather than spread over multiple years under normal depreciation rules, reducing taxable income and the current tax bill for a clear tax benefit while improving cash flow in the purchase year by bringing the deduction forward.
Worked Example: A Retail Business
Scenario: Bloomfield Home & Gifts, a small retail store. Annual turnover: $1.2 million. GST registered. Company structure — 25% tax rate.
In 2026-27, the business upgrades its point-of-sale system and refreshes the shopfloor.
| Asset | Cost (ex-GST) | Qualifies? |
|---|---|---|
| New POS terminal + software licence (hardware only) | $4,200 | Yes |
| 3 × display shelving units @ $1,800 each | $5,400 | Yes |
| Air conditioning unit (back room) | $3,900 | Yes |
| LED lighting upgrade (retail floor) | $6,200 | Yes |
| New delivery van | $36,000 | No — above threshold |
Total instant write-off: $19,700
Tax saving (company at 25%): $19,700 × 25% = $4,925 in the current year vs. spread over 5–15 years under normal depreciation. Buying qualifying assets earlier in the financial year can also support business operations for longer across the year.
What Happens to Assets That Cost $20,000 or More?
Assets costing $20,000 or more fall under the simplified depreciation regime for eligible small businesses, or under the general depreciation rules where that regime does not apply, often benefiting from specialist small business tax and accounting services to apply the rules correctly.
Under the simplified depreciation rules, small businesses add assets to a general small business pool (depreciated at 15% in the first year, 30% in subsequent years) or a long-life pool for assets with an effective life over 25 years (depreciated at 5% per year). Businesses that previously opted out can re-enter under the temporary lock out rules until 30 June 2026, and many engage chartered accountants for small business tax and compliance to make sure these depreciation choices are implemented correctly.
What You Should Do
From 1 July 2026:
- Plan asset purchases with confidence. From 1 July 2026, the write-off is permanent, unlike the old 30 June 2026 cutoff; under those earlier rules, purchasing assets before 30 June 2026 could maximise cash flow benefits, allowing businesses to bring forward a tax deduction where it suited their timing.
- Check the $20,000 threshold per asset. If you’re buying multiple items, each item must be under $20,000 individually. You cannot split a single asset purchase to bring it under the threshold.
- Keep your purchase invoices. You still need to be able to substantiate the cost, the date of purchase, and the date the asset was first available for use.
- Confirm your turnover. If you’re close to the $10 million aggregated turnover threshold, or if you’ve taken on a new related entity, check the eligibility criteria with your accountant or tax professional.
- Review your depreciation pool. If you have existing assets in a small business depreciation pool, the pool write-off rules also apply — check with BOX whether writing off your pool early makes sense for your situation.
Many business owners should align write-off decisions with broader business goals and year-round tax planning and EOFY tax strategies, not just the deduction itself.
→ Related: Business Tax Cuts 2026-27 → | Red Tape & Compliance Changes →
→ Back to the hub: Federal Budget 2026-27: Complete Guide
Frequently Asked Questions
Has the $20,000 instant asset write-off been made permanent?
Yes. The 2026-27 Federal Budget permanently legislated the $20,000 instant asset write-off for small businesses with aggregated annual turnover under $10 million, effective from 1 July 2026. The permanent rules follow the earlier extension through 30 June 2026. There is no expiry date.
Can I claim the instant asset write-off on a car?
Yes, but with an important limit. The car limit applies to passenger vehicles designed to carry fewer than 9 passengers, while commercial vehicles with a carrying capacity of more than one tonne are generally exempt. For passenger cars (as defined by the ATO), the write-off is capped at the car cost limit for the income year (the 2025-26 limit was $69,674; the 2026-27 limit will be published by the ATO). For vehicles classified as light commercial (utes, vans, etc.), the full purchase cost below $20,000 can be written off. Given most passenger cars cost well above $20,000, the write-off is more practically relevant for motorcycles and small commercial vehicles.
Can I split a $25,000 asset purchase into two invoices to get under the threshold?
No. The ATO looks through artificial arrangements. If a piece of equipment is genuinely one asset, you cannot split the purchase to claim it as two sub-$20,000 items. However, if you legitimately purchase two separate items — for example, two separate machines that function independently — each is assessed individually.
Do I need to apply to claim the instant asset write-off?
No. There is no application process. You simply include the deduction in your tax return in the income year the asset was purchased and first used (or installed ready for use). The deduction is claimed in the same financial year the asset is first used or installed ready for use. Your accountant or tax agent will handle this in your return.
What happens if I sell an asset I previously claimed under instant asset write-off?
If you sell or dispose of an asset that you wrote off under the instant asset write-off, the proceeds are treated as assessable income in the year of sale. This is because the asset was fully deducted in a prior year (its tax value is $0), so any sale proceeds are a taxable gain.
Does the instant asset write-off apply to second-hand (used) assets?
Yes. The instant asset write-off applies to both new and second-hand depreciating assets, provided all other eligibility conditions are met. They still need to satisfy the eligibility criteria.
Talk to Box AS About Maximising Your Write-Off
The $20,000 instant asset write-off is one of the most straightforward tax incentives available to eligible small businesses — but the details around aggregated turnover, mixed-use assets, and the car cost limit can catch business owners out. The BOX Advisory team can help you identify every qualifying asset, confirm whether you qualify as a small business entity, and guide you on related financial systems compliance requirements so you can claim correctly through a free or paid consultation with an experienced accountant.
Book a free 15-minute consultation — no obligation.
Last updated June 2026. This content is general in nature and does not constitute financial, tax or legal advice. Individual circumstances vary. Please consult a registered tax agent for advice specific to your situation and review our website terms and conditions for more information.
