Instant Asset Write-Off Australia: What Small Businesses Need to Know Before 30 June 2026

The $20,000 instant asset write-off is one of the most valuable tax breaks available to Australian small businesses right now — and it’s about to get a lot less generous. After 30 June 2026, the threshold drops to just $1,000 unless the government extends it again.

That gives you roughly three months to plan any purchases you’ve been putting off. Here’s what you need to know to make the most of it.

What is the instant asset write-off?

Normally, when your business buys an asset — a laptop, a piece of equipment, a vehicle — you can’t deduct the full cost in one go. Instead, you depreciate it over the asset’s useful life, claiming a portion each year.

The instant asset write-off changes that. It lets eligible small businesses deduct the full cost of an asset immediately, in the same financial year you start using it. Instead of spreading a $15,000 equipment purchase across several tax returns, you claim all $15,000 as a deduction this year. That’s a real difference to your tax bill.

Who’s eligible?

The rules are straightforward. Your business needs to meet these conditions:

Turnover under $10 million. Your aggregated annual turnover must be below $10 million for the income year. This covers the vast majority of Australian sole traders, partnerships, companies, and trusts.

Using simplified depreciation rules. You need to have opted into the ATO’s simplified depreciation rules for small business. If you haven’t previously, you can elect to use them — the usual five-year lock-out rule is suspended until 30 June 2026, which means even businesses that opted out in previous years can opt back in.

Asset costs less than $20,000. The cost of each individual asset must be under $20,000 (excluding GST if you’re registered for GST). This is a per-asset limit, not a total annual cap. You can write off as many qualifying assets as you like, as long as each one is under the threshold.

Asset is used or installed ready for use by 30 June 2026. This is the one that catches people out. Buying the asset isn’t enough — it has to be operational in your business before the deadline. If you order something in June but it doesn’t arrive until July, you miss the window.

What assets qualify?

Both new and second-hand assets are eligible, which is a detail people often miss. Here are some common examples for small businesses:

Tools and equipment. Power tools, machinery, commercial kitchen equipment, salon chairs — anything you use to deliver your services or make your products.

Technology. Laptops, desktops, monitors, tablets, printers, point-of-sale systems, and business phones. A graphic designer buying a $6,000 MacBook Pro can write off the full amount immediately.

Office furniture. Desks, chairs, shelving, filing cabinets. If you’re setting up or upgrading a workspace, now’s the time.

Vehicles (with a caveat). Business vehicles are eligible, but passenger vehicles are capped at the car cost limit — $69,674 for the 2025-26 financial year. If you buy a ute or van for $18,000 that’s used 100% for business, the full amount qualifies. If it’s mixed use, you claim only the business-use portion.

Software. Off-the-shelf software purchased outright (not subscriptions, which are already fully deductible as operating expenses).

What doesn’t qualify?

A few categories are excluded. Assets that are part of a set costing $20,000 or more when combined don’t qualify — you can’t split a $25,000 purchase across multiple invoices to get under the threshold. Horticultural plants, in-house software you develop yourself, and assets used for R&D activities have separate rules. And if you use an asset for both personal and business purposes, you can only write off the business-use portion.

What happens to assets over $20,000?

Assets that cost $20,000 or more don’t qualify for the instant write-off, but they’re not forgotten. They go into the small business depreciation pool, where they’re depreciated at 15% in the first year and 30% each year after that. If the total balance of your pool drops below $20,000 at the end of the 2025-26 income year, you can write off the entire remaining balance.

The 30 June 2026 deadline — why it matters

Here’s the critical part. The $20,000 threshold is temporary. It was extended to cover the 2023-24, 2024-25, and 2025-26 financial years. From 1 July 2026, the threshold reverts to just $1,000 unless Parliament legislates another extension.

That’s a massive drop. An asset costing $5,000 that you could write off in full today would need to go into the depreciation pool after 30 June, where you’d claim just $750 in the first year and progressively less after that.

The government may extend it again — they’ve done it before — but there’s no guarantee. Planning around the current deadline is the prudent move.

How to make the most of it before the deadline

Review what you’ve been putting off. Most business owners have a mental list of equipment or technology they’ve been meaning to upgrade. If those purchases are genuinely needed and each item is under $20,000, buying before 30 June makes financial sense.

Don’t buy things you don’t need. A tax deduction doesn’t make a bad purchase good. If you spend $15,000 on equipment you don’t actually need, you’ve still spent $15,000. The write-off reduces your tax — it doesn’t make the expense free. At a 30% tax rate, a $15,000 deduction saves you $4,500 in tax. You’re still $10,500 out of pocket.

Order early to avoid delivery delays. Remember — the asset needs to be installed and ready for use by 30 June, not just ordered or paid for. Delivery delays, supplier backlogs, and installation lead times can push you past the deadline. If you’re planning a purchase, get it sorted well before the last week of June.

Keep your records clean. You’ll need the tax invoice, proof of payment, and evidence the asset was first used before 30 June 2026. If the asset is mixed-use, document how you calculated the business-use percentage. The ATO’s data-matching is thorough, and they actively audit asset write-off claims.

Talk to your accountant. While the instant asset write-off is straightforward for simple purchases, the interaction with depreciation pools, GST credits, and business structures can get nuanced. A quick conversation with your tax advisor before making significant purchases is worth the fee.

A practical example

Say you’re a sole trader running a photography business. You’ve been using an ageing laptop and your studio lighting is on its last legs. In April 2026, you buy a new laptop for $4,500 and a lighting kit for $3,200 — both excluding GST.

Each asset is under the $20,000 threshold. You start using both immediately. On your 2025-26 tax return, you deduct the full $7,700. If your taxable income is $90,000, that’s in the 30% bracket — the write-off saves you roughly $2,310 in tax. Not life-changing, but a meaningful difference when you’re running a small operation.

If you’d waited until July, each asset would go into the depreciation pool (assuming the threshold drops to $1,000 as legislated). You’d claim just $1,155 in the first year instead of $7,700. Same purchase, very different tax outcome.

Next steps

The clock is ticking on the $20,000 instant asset write-off. If you’ve been thinking about upgrading equipment, replacing technology, or investing in tools for your business, the next three months are the window to act.

Make a list of what you need, check each item is under $20,000 (excluding GST), and get your orders in with enough lead time for delivery. Keep your receipts and records organised from the start — it makes tax time significantly less painful.

For more on managing your business deductions, check out our guide to small business tax deductions in Australia and how to lodge your BAS.