The $20,000 Write-Off Window Is Closing
The Australian Government has extended the $20,000 instant asset write-off for the 2025–26 financial year. This allows eligible small businesses to claim an immediate tax deduction for the full cost of assets costing less than $20,000, rather than depreciating them over several years.
The legislated ongoing threshold is $1,000. Unless parliament extends the $20,000 threshold again, it reverts to $1,000 from 1 July 2026. There has been no announcement of a further extension at the time of writing.
Who Can Use It?
The instant asset write-off is available to small businesses with an aggregated annual turnover of less than $10 million that use the simplified depreciation rules. The $20,000 limit applies per asset, meaning you can write off multiple qualifying items in the same year.
The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026. Both new and second-hand assets are eligible, though some exclusions apply.
Examples Across Different Industries
| Industry | Asset Example | Approx. Cost |
|---|---|---|
| Hospitality | Commercial coffee machine | $5,000 – $18,000 |
| Professional Services | Laptops and monitors | $1,500 – $5,000 |
| Retail | Point-of-sale system | $3,000 – $12,000 |
| Health & Beauty | Treatment chairs or equipment | $2,000 – $15,000 |
| Trades | Power tools and equipment | $500 – $15,000 |
| All industries | Office furniture upgrades | $1,000 – $10,000 |
| All industries | Accounting / business software (perpetual licence) | $500 – $5,000 |
How the Deduction Works
If your business purchases an asset for $15,000 (GST exclusive) and you are eligible for the write-off, you claim the full $15,000 as a deduction in your tax return for the 2025–26 income year. At a 25% company tax rate, that reduces your tax bill by $3,750.
Without the instant write-off, the same asset would go into the small business depreciation pool. You would deduct 15% in the first year ($2,250) and 30% of the declining balance each year after that. The total deduction is the same over time, but the cash flow benefit is significantly delayed.
Important: The instant asset write-off is a timing benefit, not free money. It brings forward deductions, improving cash flow in the current year. It does not reduce the total amount you can claim over the life of the asset.
Assets Over $20,000
Assets costing $20,000 or more are allocated to the small business depreciation pool and depreciated at 15% in the first year and 30% each year after that. For vehicles, the car depreciation limit for the relevant income year may cap the depreciable amount regardless of the actual purchase price.
Common Mistakes to Avoid
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- Buying assets you do not need. Spending $20,000 to save $5,000 in tax is not a good deal if you would not have bought the asset otherwise. Every purchase should be commercially justified.
- Missing the installation deadline. The asset must be installed and ready for use by 30 June 2026. Ordering in June and receiving delivery in July means the deduction falls into the following year at potentially a much lower threshold.
- Overlooking GST. If your business is registered for GST and claims input tax credits, the $20,000 threshold applies to the GST-exclusive amount. If you are not GST registered, it applies to the GST-inclusive price.
- Not using simplified depreciation rules. The write-off is only available to businesses using the simplified depreciation rules. If you have previously opted out or never opted in, you may need to check your eligibility before purchasing.
Should You Wait for an Extension?
The 2026–27 Federal Budget is expected in May 2026 and may announce a further extension. However, relying on a future announcement that has not been made is risky. If you have a genuine business need for an asset, purchasing and installing it before 30 June 2026 locks in the $20,000 threshold.
Key Takeaways
The instant asset write-off is a practical, well-understood concession that benefits small businesses across every industry. If you are planning equipment purchases, upgrades or replacements, the next three months are the window to act. Make sure any purchase is both commercially sensible and correctly timed — the deduction is only available if the asset is installed and ready for use before 30 June 2026.
For more on how we help Perth small businesses with EOFY tax planning, see our tax accountant Perth service page or our small business accounting packages.
Thinking About a Business Purchase Before 30 June?
The eligibility rules and GST treatment catch out a lot of small business owners — especially around the installation deadline. Book a free 20-minute call with Colm and we'll check your eligibility, confirm the timing, and make sure you're set up to claim it correctly. No obligation.
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