Instant Asset Write-Off
Allows eligible businesses to immediately deduct the full cost of eligible depreciating assets, rather than depreciating over time.
The instant asset write-off allows eligible businesses to immediately deduct the full cost of eligible depreciating assets in the year they are first used or installed ready for use, rather than claiming depreciation over the asset's effective life. The $20,000 threshold was settled law for small businesses (aggregated turnover under $10 million) through the 2025-26 income year (to 30 June 2026). The Budget 2026-27 announced a permanent $20,000 threshold from 1 July 2026 onward, but as of mid-2026 this had not yet passed into law — the ATO's published rate table still showed the $20,000 window ending 30 June 2026, so businesses should check whether the enabling legislation has since passed before relying on it for 2026-27.
Eligible assets include tools, equipment, office furniture, computers, vehicles, and other depreciating assets used in the business. The asset can be new or second-hand. For passenger vehicles, the deduction is capped at the car cost limit ($69,883 for 2026-27, up from $69,674 in 2025-26), regardless of the actual cost. Assets above the threshold are depreciated using the small business simplified depreciation pool (15% in the first year, 30% thereafter).
The instant asset write-off has been a popular and frequently adjusted policy. The threshold was temporarily increased to $150,000 during COVID-19 (under the enhanced instant asset write-off), and full expensing was available for businesses with turnover under $5 billion from October 2020 to June 2023. Since then, the threshold has returned to $20,000 for small businesses. Always check the current threshold and eligibility, as it has changed almost every budget.
How it works
The instant asset write-off lets an eligible small business immediately deduct the full cost of an eligible depreciating asset in the year it's first used or installed ready for use, instead of depreciating the cost over several years. The $20,000 threshold applies to businesses with aggregated turnover under $10 million and is settled law through the 2025-26 income year, to 30 June 2026 — the Budget 2026-27 announced a permanent continuation of the $20,000 threshold from 1 July 2026, but as of mid-2026 that continuation had not yet passed into law.
In practice, eligible assets include tools, equipment, office furniture, computers, and vehicles, whether new or second-hand, and the deduction is claimed in full in the year the asset is ready for business use. Passenger vehicles are capped at the car cost limit — $69,883 for 2026-27, up from $69,674 in 2025-26 — regardless of what the vehicle actually cost, so any amount above the limit simply isn't deductible under this rule. Assets above the general $20,000 threshold instead go into the small business simplified depreciation pool, at 15% in the first year and 30% in following years.
The threshold has changed almost every budget cycle: it was temporarily lifted to $150,000 during COVID-19, businesses with turnover under $5 billion had access to full expensing of any asset value from October 2020 to June 2023, and the rules have since returned to the $20,000 small business threshold. Given the announced but not-yet-legislated continuation past 30 June 2026, anyone planning a purchase for the 2026-27 year should confirm the current legislative status rather than assuming the announced figure automatically applies.
Example: an asset under the threshold versus one over it
A small business with turnover under $10 million buys and installs a $15,000 piece of equipment, ready for use within the eligible period. Because $15,000 is under the $20,000 threshold, the full amount is deducted immediately in that income year.
The same business also buys a $25,000 asset that year. Since $25,000 exceeds the threshold, it can't be written off instantly — instead it enters the simplified depreciation pool, depreciated at 15% in the first year rather than claimed in full upfront.
Related Terms
Sole Trader
An individual who runs a business in their own name, reporting business income and expenses in their personal tax return.
Depreciation (Rental Property)
Tax deductions for the declining value of a rental property's building structure and plant & equipment (fixtures and fittings).
Company Tax Rate
The flat rate of tax applied to company profits — 25% for base rate entities (turnover under $50 million) and 30% for others.
Business Activity Statement (BAS)
A form lodged with the ATO to report and pay GST, PAYG withholding, PAYG instalments, and other business tax obligations.
Australian Business Number (ABN)
A unique 11-digit number identifying a business entity to government and the community.