Instant Asset Write-Off: 30 June 2026 Timing Tests Explained (ATO)
Last reviewed:
Primary tax-year context: 2025-26
This article is general information only. We maintain pages using primary-source checks and date-based reviews. See editorial policy.
General information only. This is not tax or financial advice. Consult a registered tax agent for advice specific to your situation.
Every June, thousands of small businesses order equipment intending to claim the instant asset write-off (IAWO) in their 2025-26 return — and a meaningful slice of those deductions get pushed into 2026-27 because the asset wasn’t “first used or installed ready for use” before midnight on 30 June 2026. Invoice date does not decide the deduction year. The physical readiness of the asset does.
This article focuses on the five most common 30 June timing scenarios, the $19,999 vs $20,001 cliff, and the documentation you need to defend the deduction if the ATO asks. For the bill status, threshold history, and eligibility basics, see our earlier article on the IAWO 2025-26 extension.
The Test That Decides the Year — “First Used or Installed Ready for Use”
The IAWO rule, and the general depreciation rule it rests on (ITAA 1997 s 40-25), both turn on one phrase: “first used or installed ready for use for a taxable purpose.”
This is not the same as:
- the invoice date (the supplier’s record of the sale),
- the payment date (when you transferred the money),
- the order date (when you clicked buy),
- the delivery date (when the courier handed it over).
It is the date the asset is in your possession, configured, connected to power/network/utility if required, and ready to perform its intended income-producing function. For simple plug-and-play items (monitors, chairs, tools), delivery usually equals installation. For anything that needs setup, configuration, or professional install (servers, machinery, fit-outs, commercial kitchens), the delivery date is merely the earliest possible installation date — often installation lands later.
Documentation the ATO accepts as evidence of installation date:
- Photo with timestamp of the asset in its final operating location.
- Email or installer’s sign-off noting the completion date.
- Network or software activation logs (for IT hardware).
- First-use invoice from the asset itself (e.g., point-of-sale receipt number 1).
- A contemporaneous note in your accounting system journal.
The ATO’s position in TR 97/25 and its practical guidance is that a plausible, contemporaneous record beats a back-dated reconstruction every time. If you’re claiming a $19,000 deduction on an asset installed on 28 June 2026, take the photo on the day.
The $19,999 vs $20,001 Cliff
The IAWO threshold for the 2025-26 income year is $20,000 per asset (GST-exclusive for GST-registered businesses, GST-inclusive for unregistered). The threshold is strict, not generous. An asset at $19,999 qualifies in full; at $20,001 it does not — it goes into the small business simplified depreciation pool and deducts at 15% in year one, 30% each following year.
Quantum of the cliff on a single asset:
| Cost | Deduction 2025-26 | Deduction 2026-27 | Deduction 2027-28 |
|---|---|---|---|
| $19,999 | $19,999 (immediate) | $0 | $0 |
| $20,001 | $3,000 (15% of pool) | $5,100 (30% of $17,001) | $3,570 |
At a 27.5% company tax rate, the first-year cash tax impact on the $19,999 asset is $5,500 more than on the $20,001 asset. The second and third years partially catch up — total deductions are the same over time — but the cash timing is vastly different.
Four ways businesses accidentally cross the cliff:
- Delivery fee added at checkout. $18,500 machine + $1,700 delivery = $20,200 invoice → pool. Negotiate delivery separately as a freight service (deductible in year paid), or choose a supplier offering free delivery.
- Installation fee bundled with purchase. For most assets, installation is a separate cost of the asset and rolls into the base value — pushing a $19,000 unit + $1,500 install to $20,500. Check whether installation should instead be treated as a distinct service deduction; in many cases it shouldn’t be (the ATO’s view is that first-installation cost is a cost of the depreciating asset).
- Pair purchase counted as one asset. Two office chairs at $10,500 each = two assets at $10,500 each. Two paired monitors treated by the supplier as a single “dual-screen setup” invoice line might look like a single $20,500 asset — ask the supplier to itemise. The ATO’s test is whether each item is functionally independent.
- GST-inclusive confusion. A GST-registered business sees $22,000 inclusive on an invoice and thinks “over the threshold.” Net of GST it’s $20,000 — still on the cliff edge. A GST-unregistered sole trader sees the same invoice and has $22,000 as the IAWO test amount — genuinely over the threshold.
Run the numbers on the IAWO calculator with your actual GST registration status before clicking “order.”
Five Worked Timing Scenarios
Scenario A: Ordered 20 June, delivered 25 June, installed 28 June
Deduction year: 2025-26 ✓
Asset was installed ready for use before 30 June. The install on 28 June anchors the year.
Scenario B: Ordered 29 June, delivered 3 July, installed 4 July
Deduction year: 2026-27
The order and invoice are in 2025-26 but the asset was not installed ready for use until July. Deduction shifts to the following year. The business can still claim under IAWO in 2026-27 if the $20,000 threshold applies then — but as of April 2026 that is uncertain (the extension beyond 30 June 2026 has not been announced).
This is the most common failure mode. The sales pitch “order by 30 June to claim this year” from vendors is, strictly, wrong: install by 30 June is what matters.
Scenario C: Delivered 28 June, installer booked for 2 July
Deduction year: 2026-27 (in most cases)
If the asset genuinely cannot be used without the scheduled professional installation (e.g., a commercial oven requiring a gas-line connection, a forklift requiring electrical commissioning), it is not “installed ready for use” until the installer finishes. Self-install on 29 June would push it into 2025-26 — if that’s safe and practical for the asset type. If not, the deduction waits.
Scenario D: Self-install completed 30 June 2026 at 11 pm
Deduction year: 2025-26 ✓
The test is the income year, not business hours. Midnight is midnight. If you can genuinely point to a photo, installation log, or first-use record dated on or before 30 June 2026, the deduction stands. Keep the evidence; the ATO will not accept “I installed it that evening” without backup if they audit.
Scenario E: Purchased 15 May, sat in the box until 15 July
Deduction year: 2026-27
Buying an asset and leaving it in the packaging is explicit case-law territory: the asset is not installed ready for use. The invoice date is irrelevant. Do not claim the deduction in the purchase year just because you paid in May.
What About Multi-Asset Purchases?
The $20,000 threshold is applied per asset, not per invoice or per supplier. You can buy five laptops at $3,000 each and three monitors at $1,200 each in the same transaction and each of the eight assets individually qualifies. The test is the cost of each functionally independent item, not the total.
But: the timing test applies to each asset separately. If five laptops are delivered on 28 June and three monitors arrive on 2 July, the laptops are 2025-26 deductions and the monitors are 2026-27 deductions.
Common multi-asset planning for EOFY:
- Fit out an office at a furniture supplier: $22,000 total bill with itemised $8,000 desks, $9,000 chairs, $5,000 shelving. Three separate assets, each under $20,000 → three separate immediate deductions. Total: $22,000.
- Buy a $25,000 machine: one asset, over the threshold → pool, 15% first year. $3,750 deduction.
The first scenario deducts nine times more in year one than the second even though the cash outlay is similar.
Vehicle Assets and the Car Limit
A passenger car first used after 1 July 2025 is subject to the car limit of $69,674 for 2025-26 (ATO-indexed annually). This is a ceiling on the depreciable cost separate from and additional to the IAWO threshold.
- A $18,000 ute or van that qualifies as a commercial vehicle (not subject to the car limit) → immediate deduction via IAWO.
- A $18,000 passenger car used for a taxable purpose → also immediate deduction via IAWO (under the car limit, under the threshold).
- A $30,000 passenger car → pool entry at $30,000 (under car limit, over IAWO), 15% first year.
- A $80,000 passenger car → pool entry capped at $69,674 (the car limit), 15% first year on that capped amount only.
The depreciation calculator handles the car-limit cap and the pool mechanics together.
What If the Threshold Reverts on 1 July 2026?
The extension of the $20,000 threshold through 30 June 2026 was enacted as a temporary measure. As of April 2026 there is no announced Budget measure extending it beyond that date. If nothing changes, the threshold reverts to $1,000 from 1 July 2026 — the default small business simplified depreciation threshold in the absence of a special measure. This is one reason the EOFY 2025-26 window matters: assets installed before 30 June 2026 lock in the $20,000 ceiling; assets installed 1 July 2026 or later may face a ceiling 20× lower. Watch the 2026 Federal Budget (scheduled for 13 May 2026) for an extension announcement.
Frequently asked questions
Q: Can I claim IAWO on a second-hand asset?
Yes. The IAWO does not distinguish between new and second-hand eligible assets for small business entities. Confirm the cost is under $20,000 and the asset is first used or installed ready for use in the income year.
Q: What if I paid a deposit in June but the full asset doesn’t arrive until August?
The deduction is in the year the asset is installed ready for use (August = 2026-27), not the deposit year. The deposit does not bring forward the deduction.
Q: My invoice shows 28 June but delivery was 5 July. What do I claim?
2026-27. Keep the delivery docket and the invoice separately. If audited, the ATO will ask for the “first used or installed ready for use” date, not the invoice date.
Q: Can I use IAWO as a sole trader without an ABN?
No. You must be carrying on a business. If you derive only investment or salary income, you don’t have access to the simplified depreciation rules — you depreciate assets via Division 40 at their effective life. A sole trader with a genuine business and an ABN is eligible.
Q: What if I change from <$10M turnover to >$10M turnover mid-year?
The eligibility is tested at the end of the income year. If 2025-26 aggregated turnover is ≥$10M, you are not a small business entity for IAWO purposes that year, regardless of when during the year the boundary was crossed. Plan asset purchases to align with the turnover profile.
Q: I’m claiming IAWO — do I also keep the asset on a depreciation schedule?
No depreciation schedule is needed for assets fully written off — the deduction closes the asset’s tax value to zero. If you later sell the asset for proceeds, the full sale price is assessable income. Keep records of the sale.
Practical Cut-Off Dates for EOFY 2025-26
| Date | Action |
|---|---|
| 5 June 2026 | Place orders for any asset requiring professional installation to allow a 3-week install window. |
| 15 June 2026 | Place orders for simple delivery-only assets to allow for transit. |
| 25 June 2026 | Absolute last date to place online orders for in-stock items with 1-week delivery. |
| 28 June 2026 | All assets should be physically on site and either self-installed or installer-booked. |
| 30 June 2026 | All assets installed ready for use. Take the photo. Save the email. |
Leaving asset purchases to the last week of June is the single largest cause of IAWO claims shifting to the following year.
Sources
- Income Tax Assessment Act 1997, s 40-25 (Deduction for depreciating assets), s 328-180 (Small business entity simplified depreciation)
- ATO — Instant asset write-off
- ATO — Car limit for depreciation
- ATO — TR 97/25 Depreciation
- ATO — Installed ready for use
Model your EOFY asset list
Before clicking order on your last-minute 30 June purchases, run the amounts through the instant asset write-off calculator to confirm per-asset eligibility, and the depreciation calculator to see what the pool deduction looks like if anything breaches the $20,000 ceiling. Photo every installation. Save every email. The deduction is worth the paperwork.
See how this lever ranks against your other 30-June moves: EOFY Action Plan.