If you run a small business in Australia, the instant asset write-off is one of the most useful tax breaks available to you right now. It is also one of the most underused.
The good news? As part of the 2025 Federal Budget, the Australian Government extended the small business instant asset write-off, keeping the threshold at $20,000 – the $20k instant asset write-off – through to 30 June 2026. That means you still have time to make the most of it before the financial year ends.
Here’s everything you need to know, in plain English.
What Is the Instant Asset Write-Off?
The ATO instant asset write-off is a tax deduction that lets eligible small businesses claim the full cost of an asset in the same year they buy and use it, instead of spreading the deduction over several years through depreciation.
In simple terms: buy an asset for your business, use it before 30 June 2026, and deduct the full cost from your taxable income that same year. Less taxable income means a lower tax bill.
What Is the Instant Asset Write-Off Threshold for 2025-26?
For the 2025–26 financial year, the $20,000 instant asset write-off threshold sits at $20,000 per asset (excluding GST).
This limit applies per asset and not as a total. So if you purchase three eligible assets each under $20k, you can claim all three immediately.
Any asset costing $20,000 or more cannot be claimed under this scheme. Instead, it goes into the small business pool and is depreciated at 15% in the first year and 30% each year after that.
Who Is Eligible for the Instant Asset Write-Off 2025–26?
To claim the small business instant asset write-off in 2025–26, your business must:
- Have an aggregated annual turnover of less than $10 million
- Apply the simplified depreciation rules
- Have the asset first used or installed, ready for use, between 1 July 2025 and 30 June 2026
What Assets Can You Claim Under the Instant Asset Write-Off?
A wide range of business assets is eligible. Common examples relevant to Australian SMEs include:
- Restaurants & cafes: commercial kitchen equipment, coffee machines, point-of-sale systems
- Retail stores: display shelving, computers, storage equipment
- Clinics & salons: treatment chairs, specialist tools, booking software, hardware
- Tradies & service businesses: power tools, work equipment, safety gear
- All businesses: laptops, printers, office furniture, software (where it qualifies)
Both new and second-hand assets are eligible under the scheme.
What Assets Are Excluded From the Instant Asset Write-Off?
Not everything qualifies. Assets excluded from the simplified depreciation rules cannot be claimed under the ATO instant asset write-off. These include certain intangible assets and assets used in specific R&D activities.
Passenger vehicles also have a separate car limit; the full $20k instant asset write-off doesn’t automatically apply to all vehicles. However, vehicles not classified as passenger vehicles, such as utes with a payload capacity over one tonne, are not subject to this car limit.
If you’re unsure whether a specific asset qualifies, it’s worth checking with your accountant or bookkeeper before purchasing. You can also visit our tax outsourcing services page for guidance.
How Does the $20,000 Instant Asset Write-Off Work?
Here’s a straightforward example:
Sarah runs a small café in Melbourne with an annual turnover of $800,000. In August 2025, she buys a new commercial coffee machine for $12,000 (excluding GST). She uses it in her business immediately.
Because the machine costs less than the $20,000 instant asset write-off limit and was installed ready for use within the 2025–26 financial year, Sarah can claim the full $12,000 as a deduction in her tax return for that year, reducing her taxable income by $12,000.
If the machine had cost $22,000, she wouldn’t have been able to use the small business instant asset write-off. Instead, the $22,000 would go into the small business pool to be depreciated over time.
Instant Asset Write-Off: Key Dates to Remember
| Milestone | Date |
|---|---|
| Assets must be first used or installed ready for use | By 30 June 2026 |
| Current threshold | $20,000 per asset (excl. GST) |
| Eligible turnover | Under $10 million aggregated |
| Pool balances under $20,000 | Can be written off at the end of 2025–26 |
How to Claim the Instant Asset Write-Off
Claiming is straightforward:
- Purchase the asset: ensure it costs less than $20,000 (excl. GST)
- Use it or install it ready for use before 30 June 2026
- Keep your records: invoices, receipts, and proof of business use
- Claim it in your tax return for the 2025–26 income year under simplified depreciation rules
- Only claim the business-use portion: if you use the asset partly for personal use, only the business percentage is deductible
Don't Let Poor Records Cost You This Deduction
The instant asset write-off Australia rules are clear, but the deduction is only as useful as the records behind it. If your invoices are missing, your accounts are messy, or your business-use percentages aren’t documented, the ATO can disallow your claim.
This is where professional bookkeeping makes a real difference. Accurate, up-to-date records mean you can claim every deduction you’re entitled to, without stress at tax time.
If managing your books feels like a burden, explore our tax and bookkeeping outsourcing services to see how we can help keep your finances ATO-ready year-round.
FAQs
What is the instant asset write-off threshold for 2026?
What is the instant tax deduction for 2026?
The instant tax deduction for 2026 refers to the $20,000 instant asset write-off, which allows eligible small businesses to immediately deduct the full cost of qualifying assets purchased and used before 30 June 2026, rather than depreciating them over multiple years. The ATO instant asset write-off page confirms this measure is now legislated.
What is the most overlooked tax break in Australia?
What is the asset threshold for 2026?
How does the $20,000 instant asset write-off work?
Disclaimer: This blog is for general informational purposes only and does not constitute tax or financial advice. Please consult a registered tax professional for advice specific to your business.