Instant Asset Write-Off 2025–26: Extension Status and Core Rules
- Published
- February 2026
- Last reviewed
- Tax-year context
- 2025-26
- Reading time
- 4 min
General information only — we maintain pages with 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.
The instant asset write-off lets eligible small businesses immediately deduct the full cost of assets below the threshold rather than depreciating them over several years. For 2025–26, the threshold is $20,000 per asset and is now law. Here is what the rules look like, what has changed over time, and what applies for the 2026-27 year onward.
Status of the 2025–26 extension
The $20,000 instant asset write-off was extended through to 30 June 2026 for eligible small business entities by the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025, which has received Royal Assent — the ATO confirms “that measure is now law.” Under this measure, an asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026 to qualify.
The 2025–26 threshold is therefore settled — there is no remaining risk of it reverting to the $1,000 default for assets used or installed in this income year.
A separate, not-yet-law measure announced in the 2026-27 Budget proposes making the $20,000 threshold permanent from 1 July 2026 onward (via the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026). That extension has not passed — monitor its progress if you’re planning purchases for 2026-27 or later.
Who is eligible
The instant asset write-off applies to small business entities using the simplified depreciation rules. The eligibility test is based on aggregated turnover under $10 million. Aggregated turnover includes the turnover of related entities, not just the business itself.
Businesses above the $10 million threshold may have access to other depreciation concessions under the general tax rules, but not the instant asset write-off.
How the rules work
Per asset basis. The $20,000 threshold is assessed on each individual asset, not on total purchases for the year. A business can claim multiple assets in the same year as long as each one individually costs less than $20,000 (GST exclusive for registered businesses, GST inclusive for unregistered businesses).
Timing test. The asset must be first used or installed ready for use in the income year the deduction is claimed. Buying an asset in June but not setting it up until July means it falls into the next income year.
Business use percentage. Only the business-use portion is deductible. An asset used 70% for business and 30% privately can only be written off at 70% of cost.
Excluded assets. Some assets are not eligible even if the cost is below the threshold, including certain horticultural plants, capital works (structural improvements), assets used for R&D activities that are claimed under the R&D Tax Incentive, and leased assets.
Assets at or above $20,000
Assets that cost $20,000 or more (or that you choose not to write off) go into the small business simplified depreciation pool. The pool deduction rates are:
- 15% in the income year the asset is first used or installed ready for use
- 30% in each subsequent year on the pool balance
The pool balance can itself be written off in full if it falls below the instant asset write-off threshold at the end of the income year.
Threshold history
The threshold has changed significantly over the past several years:
| Income year | Threshold |
|---|---|
| 2025–26 (law) | $20,000 |
| 2024–25 | $20,000 |
| 2023–24 | $20,000 |
| 2022–23 | $150,000 (temporary full expensing ended) |
| 2020–21 and 2021–22 | Unlimited (temporary full expensing) |
| 2019–20 | $150,000 (COVID measure) |
| 2018–19 | $30,000 |
The large swings — particularly the temporary full expensing period of 2020–2022 — mean that comparing historical depreciation claims across years requires care.
Common qualifying examples
Assets that frequently qualify under the $20,000 threshold include:
- Laptop or desktop computers and monitors
- Power tools, hand tools, and workshop equipment
- Office furniture (desks, chairs, shelving)
- Vehicle accessories and fit-outs (bull bars, tow bars, racks)
- Point-of-sale equipment and small kitchen appliances for food businesses
- Security cameras and alarm equipment
These are examples only. The key test is whether the asset is used in producing assessable income and whether it meets the cost and timing conditions.
Practical checklist
Before claiming the instant asset write-off in your 2025–26 return:
- Confirm your aggregated turnover (including related entities) is under $10 million.
- Record the date the asset was first used or installed ready for use — this date must fall in the 2025–26 income year.
- Keep the purchase invoice showing the GST-exclusive cost.
- Document the business-use percentage and how you calculated it.
- Check that the asset is not in an excluded category.
- Note the $20,000 threshold for 2025–26 is settled law (Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025) — if you’re planning purchases for 2026-27 or later, monitor the separate, not-yet-passed permanence measure instead.