Instant Asset Write-Off

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.