Mr says
The $20,000 instant asset write-off is permanent from 1 July 2026 for small businesses with aggregated turnover under $10 million. Each eligible asset must cost less than $20,000 and be first used or installed ready for use in the income year you claim it. Assets of $20,000 or more go into the small business pool. With no annual deadline any more, buy when the business needs the asset — the deduction is a bonus, not the reason.
Key points
- Permanent from 1 July 2026 — no more year-by-year extensions.
- Aggregated turnover must be under $10 million.
- Each asset must cost less than $20,000 in total.
- The asset must be used or installed ready for use in the year claimed.
- A deduction saves tax at your rate; it doesn't make the asset free.
The end of the June scramble
For several years, the instant asset write-off lived on borrowed time. Thresholds changed, extensions were announced late, and owners rushed to buy before 30 June in case the concession vanished. Equipment suppliers ran “beat the deadline” sales. Some owners bought things they didn’t need, with money they didn’t have, for a deduction worth a fraction of the price.
That cycle is over. The ATO now says the $20,000 instant asset write-off has been made permanent for small businesses from 1 July 2026, through the Treasury Laws Amendment (Tax Reform No. 2) Act 2026. In the ATO’s words: “This measure is now law.” The previous one-year extension covering 2025–26 has been superseded by the permanent arrangement.
Mr’s summary: there’s no cliff any more. Buy when the business needs the asset.
The rules, in plain English
| Rule | What it means |
|---|---|
| Aggregated turnover under $10 million | Your turnover plus that of affiliates and connected entities |
| Each asset under $20,000 | The limit applies per asset, so several can qualify |
| Whole cost under the limit | Even if business use is partial, the entire cost must be under $20,000 |
| Used or installed ready for use | In the income year you claim — buying isn’t enough |
| Business portion only | You deduct only the taxable-purpose share |
| $20,000 or more | Goes into the small business pool instead |
The ATO describes the pool this way: assets of $20,000 or more can be placed in the simplified depreciation pool and depreciated at 15% in the first year, then 30% each year after. If the pool balance is below $20,000 at year end, it can be written off too.
The three traps Mr sees most
Trap 1: “It’s a write-off, so it’s free”
A deduction reduces taxable income; the saving is the deduction times your tax rate. Illustratively, at a rate of 25 cents in the dollar, a $16,000 asset saves about $4,000 in tax. The other $12,000 is real money. If you didn’t need the asset, you’re $12,000 worse off, not better.
Trap 2: The whole-cost rule
A $21,500 vehicle used 85% for business doesn’t qualify for the instant write-off, even though 85% of $21,500 is under $20,000. The ATO is explicit: the entire cost must be below the limit. It goes in the pool instead.
Trap 3: Bought but not installed
A machine paid for on 28 June but not installed until mid-July belongs to the next income year. The test is first used or installed ready for use, not when the invoice is dated.
So: buy, borrow or wait?
Work through it in this order.
1. Does the business need the asset?
Would it earn more, save labour, cut waste, replace something failing or let you take on work you’re currently turning away? If the honest answer is “not really”, wait. The concession will still be there.
2. Can you pay cash without hurting cash flow?
If you have genuine surplus cash and the purchase won’t leave you short for wages, BAS, rent and super (now due each payday under Payday Super), paying cash is simplest.
3. If not, does borrowing make sense?
Borrowing to buy an asset that pays its way is a classic, sensible use of finance. A few rules of thumb:
- Match the term to the asset’s life. Don’t take five years to pay for something that lasts two.
- Use the right tool. For one-off purchases under $20,000, an unsecured loan or line of credit often suits; for several assets or larger fit-outs, a term loan or property-secured loan may be better. See line of credit or term loan.
- Count the full cost. Interest and fees, in dollars — what a business loan actually costs shows how.
- Interest is a separate deduction. Interest on money borrowed for business equipment is generally deductible on its own, apart from the write-off on the asset. See is a business loan tax deductible?.
4. Is timing still worth thinking about?
A little. Buying and installing before 30 June brings the deduction into the current year, which helps if this year’s profit is unusually high. But don’t strain next quarter’s cash to pull a deduction forward unless your accountant has run the numbers. Our page on borrowing before 30 June covers the timing question.
An illustrative example
A Canberra café’s 12-year-old espresso machine is failing weekly, costing sales on every breakdown. A replacement costs $17,800 installed. The café could pay cash, but that would leave it thin before a quiet January. Instead, the owner takes a short unsecured loan, has the machine installed in November, and claims the instant write-off for that year. The new machine pays for itself in avoided downtime and lower repair bills; the write-off and the deductible interest are bonuses.
If the owner had also wanted a $26,000 coffee roaster, that one would go into the small business pool instead — same purchase logic, different tax treatment.
Illustrative only.
A checklist before you buy
- Will this asset earn or save more than it costs?
- Is the total cost under $20,000 if you’re counting on the instant write-off?
- Is aggregated turnover under $10 million?
- Will it be installed ready for use this income year?
- Can repayments sit comfortably alongside BAS, wages and super?
- Has your accountant confirmed the treatment for your structure?
Which assets typically qualify?
Most depreciating assets a small business buys to earn income: tools and machinery, computers and phones, office furniture, commercial kitchen equipment, shop fittings, signage and many vehicles — provided each costs under $20,000 and the other rules are met. There are exclusions and special rules for some assets, and items that aren’t depreciating assets (like trading stock) don’t qualify at all. If in doubt, ask your accountant before you buy rather than after.
How does the write-off interact with GST?
For a GST-registered business, the cost used for the write-off is generally the price excluding the GST you can claim back as a credit. So a $21,000 asset including GST may come in under the limit once the GST credit is taken out — but check the numbers with your accountant, because whether you can claim the credit, and how much of the asset is for business use, both matter.
Should I buy several smaller assets instead of one big one?
Only if that’s what the business genuinely needs. The limit applies per asset, but splitting what is really one asset into parts to squeeze under the threshold is the kind of arrangement your accountant will warn you about. Buy the equipment that does the job best; let the tax treatment follow.
What’s a sensible yearly rhythm now?
With the deadline pressure gone, Mr suggests a calmer routine. Each quarter, when you lodge your BAS, list any equipment that’s failing, any you’re hiring repeatedly and any capacity you’re short of. Price it, work out what it would earn or save, and decide whether to buy now, plan it for a quieter month or wait. You’ll make better decisions spread across the year than you ever did in a June rush.
What records should I keep for the write-off?
Keep the tax invoice, proof of payment, the date the asset was first used or installed ready for use, and a note of the business-use percentage if it isn’t used entirely for business. A photo of the installed equipment with the date can help too. If the asset was financed, keep the loan documents with the purchase records so your accountant can see both the asset cost and the interest in one place.
Need an asset that pays its way?
Mr is all for equipment that makes money. Ask in about 60 seconds — tell us what you’re buying, what it costs and how it earns its keep. There’s no credit check to enquire, your details aren’t passed around a crowd of lenders, and a real person will match the loan to the asset’s life rather than the tax calendar. Accurate purchase details help us find the right structure first go. See if you qualify.
Frequently asked questions
Is the $20,000 instant asset write-off permanent?
Yes. The ATO says the $20,000 instant asset write-off has been made permanent for small businesses from 1 July 2026, and that the measure is now law.
Who is eligible?
Small businesses with aggregated turnover less than $10 million that use the simplified depreciation rules. Aggregated turnover includes the turnover of affiliates and connected entities.
Can I write off a second-hand asset?
The write-off is about eligible depreciating assets that cost less than the limit and are first used or installed ready for use in the year. Check specific assets with your accountant, as some exclusions apply.
What happens to assets costing $20,000 or more?
The ATO says they can be placed in the small business pool and depreciated at 15% in the first year and 30% each year after. If the pool balance is under $20,000 at the end of the year, it can be written off.
Should I borrow to buy equipment for the write-off?
Only if the equipment earns or saves more than it costs. The write-off reduces tax; it doesn't cover the purchase price. Borrowing makes sense when the asset pays its own way.