Mr says
Only if you need the equipment anyway. The $20,000 instant asset write-off is now permanent from 1 July 2026 for small businesses with aggregated turnover under $10 million, so there's no annual cliff to rush for. Each asset must cost less than $20,000 and be first used or installed ready for use in the income year you claim it. A deduction reduces tax; it doesn't make an unnecessary purchase free.
Key points
- The $20,000 instant asset write-off is now permanent from 1 July 2026.
- It applies per asset, for aggregated turnover under $10 million.
- The whole cost must be under $20,000, even if only part is for business use.
- A deduction saves tax at your marginal rate — not the full purchase price.
- Write-off limit
- Each asset under $20,000
- Turnover test
- Aggregated turnover under $10m
- Status
- Permanent from 1 July 2026
What changed with the instant asset write-off?
For years, the $20,000 instant asset write-off was extended one year at a time, often at the last minute. That created a June scramble: owners rushing to buy before a threshold dropped.
That’s over. The ATO now confirms the $20,000 instant asset write-off has been made permanent for small businesses from 1 July 2026, enacted through the Treasury Laws Amendment (Tax Reform No. 2) Act 2026. The ATO’s wording: “This measure is now law.”
Mr’s translation: there’s no cliff on 30 June any more. Buy when the business needs the asset.
Who can use it, and on what?
| Rule | What the ATO says |
|---|---|
| Turnover | Aggregated turnover less than $10 million |
| Limit | Each asset must cost less than $20,000 |
| Timing | First used or installed ready for use in the income year |
| Business use | Only the business portion is deductible |
| Whole cost test | The entire cost must be under the limit, regardless of business-use percentage |
| Multiple assets | The limit applies per asset |
| Over the limit | Goes into the small business pool and is depreciated |
That “whole cost” rule trips people up. A $22,000 ute used 90% for business doesn’t qualify for the instant write-off, even though the business portion is under $20,000.
Does a write-off make a purchase “free”?
No, and this is the misunderstanding Mr hears most. A deduction reduces taxable income. The tax saved is the deduction multiplied by your tax rate — a fraction of the price, not the whole thing.
Illustrative example. A company buys a $15,000 coffee machine. If its tax rate were, say, 25 cents in the dollar, the write-off would save roughly $3,750 in tax. The other $11,250 is still a real cost. If the business didn’t need the machine, it’s $11,250 worse off.
Ask your accountant what rate applies to you — sole traders, partnerships, companies and trusts all differ.
So when does borrowing to buy equipment make sense?
When the equipment earns or saves more than it costs, and the tax deduction is a bonus rather than the reason:
- replacing a machine that keeps breaking down and costing jobs;
- adding capacity you’re already turning work away for;
- buying instead of hiring something you hire constantly;
- equipment that cuts labour time or wastage.
For assets under $20,000, an unsecured loan or line of credit often suits. For larger purchases, a term loan structured to the asset’s useful life is usually better. See line of credit or term loan.
What about the interest on the loan?
Interest on money borrowed to buy business equipment is generally deductible as well — separate from the write-off on the asset itself. Is a business loan tax deductible? explains how use decides it.
Is there any reason to time a purchase around 30 June?
A smaller one than before. If you were going to buy in July anyway, buying and installing in June brings the deduction forward a year — useful if this year’s profit is unusually high. But don’t borrow against next year’s cash flow just to pull a deduction forward unless your accountant has run the numbers. Cash in the bank in a quiet August can be worth more than a deduction in June.
Our guide to the instant asset write-off becoming permanent covers planning ideas in more detail.
A checklist before you buy
- Does the business genuinely need it now?
- What will it earn or save each month?
- Is the total cost under $20,000 (if you want the instant write-off)?
- Will it be installed ready for use in this income year?
- Can repayments fit comfortably alongside BAS, wages and super?
- Has your accountant confirmed the tax treatment?
What counts as aggregated turnover?
It’s not just your own business’s sales. The ATO describes aggregated turnover as the annual turnover of your business plus that of any business entities that are your affiliates or connected with you. If you own several businesses, or a family group has related entities, their turnover may be added together for the $10 million test. Your accountant can confirm which entities count — it matters for whether the write-off applies at all.
How should I time repayments against the deduction?
The deduction arrives when you lodge your return; the repayments start almost straight away. If the asset is bought in June with borrowed money, the business may be repaying for many months before the tax benefit shows up in a refund or a smaller tax bill. Factor that into cash flow — particularly around BAS dates and payday super — so that a sensible purchase doesn’t create a short-term squeeze. A loan term matched to the asset’s useful life keeps repayments sensible.
What if I buy the asset second-hand?
Second-hand assets can generally be written off too, as long as each one costs less than the limit and meets the other rules. Buying used can be a smart way to get capacity for less money — just budget for repairs, and check the PPSR so you know no-one else holds security over it. business.gov.au recommends a PPSR check when buying business assets.
Need equipment and the funds to buy it?
Ask Mr in about 60 seconds — what you’re buying, what it costs and how it pays for itself. There’s no credit check to enquire, your enquiry isn’t spread around a list of lenders, and a real person will match the loan to the asset rather than the calendar. Clear details about the purchase help us find the right fit first time. See if you qualify.
Frequently asked questions
Do I need to have paid for the asset to claim it?
The ATO test is about when the asset is first used or installed ready for use, not just when you buy it. An asset bought on 29 June but not installed until July falls into the next year.
What if the asset costs more than $20,000?
It can't be written off instantly. Small businesses using simplified depreciation place it in the small business pool instead, where it's depreciated over time.
Can I write off a $25,000 asset I only use 80% for business?
No. The ATO says the entire cost of the asset must be less than the limit, even though you can only claim the business-use portion as a deduction.
Can I write off several assets?
Yes. The limit applies per asset, so multiple eligible assets can each be written off, as long as each costs less than $20,000.