Instant Asset Write-Off 2026 — What Qualifies and What Doesn't
The instant asset write-off is one of the most valuable tax deductions available to Australian small businesses — but it's also one of the most misunderstood. Every financial year, the rules shift slightly, the threshold changes, and business owners are left wondering: can I write this off or not?
Here's where things stand for the 2025–26 financial year.
The Current Rules (2025–26)
On 4 April 2025, the government extended the $20,000 instant asset write-off for another 12 months. This is now law.
The key details:
| Detail | 2025–26 Rule |
|---|---|
| Threshold | Less than $20,000 per asset |
| Eligible businesses | Aggregated turnover under $10 million |
| Applies to | New and second-hand assets |
| Period | First used or installed ready for use between 1 July 2025 and 30 June 2026 |
| Per asset or total? | Per asset — you can write off multiple assets |
| Assets at $20,000 or more | Go into the small business depreciation pool |
The threshold is less than $20,000 — not $20,000 exactly. An asset costing exactly $20,000 does not qualify. It needs to be $19,999.99 or below.
GST and the Threshold
This trips people up every year.
- Registered for GST: The $20,000 threshold applies to the GST-exclusive price. A $21,890 purchase (inc. GST) is actually $19,900 excluding GST — so it qualifies.
- Not registered for GST: The threshold applies to the GST-inclusive price (the total amount you paid).
If you're registered for GST, you'll claim the GST component back separately as an input tax credit on your BAS. The instant write-off is just for the net amount.
What Qualifies
The instant asset write-off applies to most depreciating assets — things your business owns that have a limited useful life and decline in value over time.
Common Assets That Qualify
Here are examples of assets that small businesses commonly write off under the $20,000 threshold:
| Asset | Typical Cost | Qualifies? |
|---|---|---|
| Laptop | $1,500–$3,500 | ✅ Yes |
| Desktop computer | $1,000–$2,500 | ✅ Yes |
| iPad / tablet | $500–$2,000 | ✅ Yes |
| Mobile phone | $500–$2,000 | ✅ Yes |
| Printer / scanner | $300–$1,500 | ✅ Yes |
| Office desk | $400–$2,000 | ✅ Yes |
| Office chair | $300–$1,500 | ✅ Yes |
| Air conditioning unit (portable/split) | $1,000–$5,000 | ✅ Yes |
| Power tools (drill, saw, sander) | $200–$2,000 | ✅ Yes |
| Commercial espresso machine | $3,000–$15,000 | ✅ Yes (if under $20K) |
| Point-of-sale system | $1,000–$5,000 | ✅ Yes |
| Work ute tray fitout | $3,000–$15,000 | ✅ Yes (if under $20K) |
| Software licence (perpetual, not SaaS) | $500–$10,000 | ✅ Yes |
| Second-hand equipment | Varies | ✅ Yes |
| Website development | $2,000–$15,000 | ✅ Yes (if under $20K) |
Remember: The write-off is for the business portion only. If you use a $2,000 laptop 60% for business and 40% personal, you write off $1,200 — not the full amount. But the $20,000 threshold is measured against the total cost of the asset, not just the business portion.
What About Multiple Assets?
The $20,000 limit applies per asset, not as a total. You could buy:
- A $4,000 laptop
- A $2,500 desk and chair
- A $15,000 ute fitout
- A $1,200 phone
That's $22,700 in total — and every single item qualifies for an instant write-off because each individual asset is under $20,000.
There's no cap on how many assets you can write off in a financial year, as long as each one is under the threshold.
What Doesn't Qualify
This is where most people get caught out. Not everything can be instantly written off — even if it costs less than $20,000.
Assets Excluded from Simplified Depreciation Rules
The instant asset write-off operates under the ATO's simplified depreciation rules. A small number of asset types are specifically excluded:
| Excluded Asset | Why It's Excluded |
|---|---|
| Assets leased out for more than 50% of the time | Leased assets have different rules |
| Horticultural plants (including grapevines) | Separate capital allowance provisions apply |
| Software in a software development pool | Has its own pooling arrangement |
| Assets used for R&D activities | Covered by R&D tax incentive instead |
| Capital works (buildings, structural improvements) | Claimed under capital works deductions (Div 43), not depreciation |
| Assets allocated to a low-value pool before opting into simplified depreciation | Can't be moved retrospectively |
Assets That Cost $20,000 or More
These don't disappear from your tax return — they just can't be instantly written off. Instead, they go into the small business depreciation pool:
- First year: Claim 15% of the asset's cost
- Each year after: Claim 30% of the pool's closing balance
The pool balance itself can be written off if it drops below $20,000 at the end of the 2025–26 income year.
For a detailed breakdown of how the pool works, check our guide on how to calculate depreciation for Australian small businesses.
Things That Aren't Assets
This sounds obvious, but some purchases aren't depreciating assets at all — they're operating expenses and are claimed differently:
- Stock and inventory — deducted as cost of goods sold
- Rent and lease payments — deducted as operating expenses
- SaaS subscriptions (e.g., Xero, Slack, software-as-a-service) — deducted as operating expenses, not assets
- Repairs and maintenance — generally deducted immediately as an expense (not an asset purchase)
- Land — doesn't depreciate
If something is already a fully deductible expense, you don't need to use the instant write-off. It's only for capital purchases (assets).
The Cost Includes More Than the Purchase Price
A mistake many small business owners make is only looking at the sticker price. The ATO defines "cost" as the total amount to get the asset installed and ready for use. That includes:
- The purchase price
- Delivery and freight charges
- Installation costs
- Any modifications needed to make it operational
Example: You buy a $12,000 air conditioning system. Delivery costs $500 and installation costs $4,500. The total cost of the asset is $17,000 — which still qualifies for instant write-off. But if the installation had been $8,500, the total would be $21,000 and you'd need to put it in the depreciation pool instead.
This catches tradies especially — a piece of equipment might cost $14,000 but once you add delivery and setup, it tips over the $20,000 threshold.
How the Threshold Has Changed
The instant asset write-off threshold has bounced around over the years. Here's a brief history:
| Period | Threshold | Turnover Limit |
|---|---|---|
| Before 12 May 2015 | $1,000 | $2 million |
| 12 May 2015 – 28 Jan 2019 | $20,000 | $10 million |
| 29 Jan 2019 – 2 Apr 2019 | $25,000 | $10 million |
| 2 Apr 2019 – 11 Mar 2020 | $30,000 | $50 million |
| 12 Mar 2020 – 30 Jun 2020 | $150,000 | $500 million |
| 1 Jul 2020 – 30 Jun 2023 | Temporary full expensing (no limit) | $5 billion |
| 1 Jul 2023 – 30 Jun 2026 | $20,000 | $10 million |
During the COVID period (2020–2023), the government introduced temporary full expensing — essentially unlimited instant write-off for eligible businesses. That ended on 30 June 2023, and we're now back to the $20,000 per-asset limit.
If you were used to writing off a $50,000 vehicle or $80,000 piece of machinery in one go during those years, that option is no longer available. Those assets now go into the small business pool.
Step-by-Step: How to Claim the Instant Write-Off
1. Check Your Eligibility
Your business needs to:
- Have an aggregated turnover of less than $10 million
- Be using the ATO's simplified depreciation rules (most small businesses should be)
- Have purchased and first used or installed the asset between 1 July 2025 and 30 June 2026
Important: "First used or installed ready for use" is the trigger date — not the purchase date. If you buy a machine in June 2026 but it doesn't get delivered and installed until August 2026, you'll need to claim it in the 2026–27 year instead.
2. Confirm the Asset Qualifies
Make sure the asset:
- Costs less than $20,000 (GST-exclusive if you're registered for GST)
- Is a depreciating asset (not land, stock, or an operating expense)
- Isn't on the excluded assets list
3. Record It Properly
At the very minimum, keep:
- Tax invoice / receipt showing the purchase price
- Date the asset was first used or installed ready for use
- Description of the asset
- Business use percentage (if it's also used privately)
This is where an asset register becomes essential. You need to track what you bought, when you started using it, and what you claimed. If the ATO audits you, "I think I bought it last year" won't cut it.
4. Claim It in Your Tax Return
The deduction is claimed in your business tax return for the income year in which the asset was first used or installed ready for use. Your accountant will include it as part of your depreciation schedule.
5. Track Ongoing
Even though you've claimed the full cost immediately, you should still track the asset in your register. You might need to:
- Account for disposal later (which may trigger a balancing adjustment)
- Track it for insurance purposes
- Include it in stocktakes
- Know where it is across your business locations
Common Mistakes to Avoid
1. Claiming Before the Asset Is Ready for Use
You ordered a new piece of equipment in May, but it's not delivered and installed until August. You can't claim the write-off in the current financial year — it hasn't been "first used or installed ready for use" yet.
2. Forgetting Installation Costs Push You Over the Threshold
The purchase price alone might be under $20,000, but once you add delivery, installation, and setup — the total cost could exceed the limit. Always calculate the total cost.
3. Writing Off the Full Amount When There's Private Use
If you use the asset partly for personal purposes, you can only claim the business portion. A $5,000 phone used 70% for business can only be written off for $3,500.
4. Not Keeping Records
The ATO requires you to keep records of every asset you claim a deduction for. A receipt in a shoebox isn't good enough. You need an organised system — whether that's a spreadsheet or dedicated software.
5. Assuming SaaS Subscriptions Are Assets
Monthly software subscriptions (Xero, Microsoft 365, Canva, etc.) are operating expenses, not depreciable assets. You deduct them immediately as an expense anyway — they don't need the instant asset write-off.
6. Confusing the Current Threshold with Previous Years
During COVID, temporary full expensing allowed businesses to write off assets worth hundreds of thousands of dollars. That's gone. If you're buying a $40,000 vehicle in 2025–26, it goes in the depreciation pool — not a one-off write-off.
What Happens to Assets Over $20,000?
Assets costing $20,000 or more go into the small business depreciation pool. This is actually still a decent deal:
- Year 1: Deduct 15% of the asset's cost
- Year 2+: Deduct 30% of the pool's closing balance each year
- Pool balance under $20,000: Can be fully written off at end of the 2025–26 year
The pool simplifies things because you don't need to track individual depreciation schedules for each asset — they all go into one pot. But you do still need to know what's in the pool.
For a full explanation of depreciation methods (including the pool), see our complete depreciation rates guide.
Practical Examples
Example 1: The Café Owner
Sarah runs a café with a turnover of $800,000. In October 2025, she buys:
| Asset | Cost (ex GST) | Qualifies? |
|---|---|---|
| Commercial coffee grinder | $3,200 | ✅ Instant write-off |
| Replacement POS system | $4,500 | ✅ Instant write-off |
| New display fridge | $6,800 | ✅ Instant write-off |
| Kitchen renovation (structural) | $35,000 | ❌ Capital works — not a depreciating asset |
Sarah can immediately deduct $14,500 (the three qualifying assets). The kitchen renovation is a capital works deduction claimed over 40 years under Division 43 — not the instant write-off.
Example 2: The Sole Trader Tradie
Jake is an electrician (sole trader, turnover $280,000). In March 2026, he buys:
| Asset | Cost (ex GST) | Qualifies? |
|---|---|---|
| New power tools (drill, saw, multimeter) | $2,800 total | ✅ Instant write-off (each tool is a separate asset) |
| Ute tray fitout | $12,000 | ✅ Instant write-off |
| New work ute | $55,000 | ❌ Over $20,000 — goes into the SB pool |
Jake writes off $14,800 immediately and puts the $55,000 ute into his small business pool (claiming 15% = $8,250 in the first year).
Example 3: The Home Office Worker
Priya runs a consulting business from home. She buys a $2,400 laptop that she uses 75% for business.
- Total cost: $2,400 (under $20,000 ✅)
- Business portion: $2,400 × 75% = $1,800 deduction
- Private portion: Not deductible
She claims $1,800 as an instant write-off in her tax return.
Track Your Write-Offs Properly
Claiming the instant asset write-off is the easy part. Keeping track of what you've claimed, what's in your depreciation pool, and what your assets are worth now — that's where it gets complicated, especially as your business grows.
A proper asset management system gives you:
- A clear record of every asset for ATO compliance
- Automatic tracking of which assets were written off vs pooled
- Depreciation calculations that update each financial year
- Reports your accountant can use at tax time
AssetShark handles all of this for Australian small businesses. Enter your assets, and the software figures out whether they qualify for instant write-off, calculates pool depreciation, and generates the reports you need at EOFY.
Try AssetShark — early access →
Frequently Asked Questions
Can I use the instant asset write-off for a car?
Yes — if the car costs less than $20,000 (ex GST). However, most new cars exceed this threshold, so they'd go into the small business pool instead. Note that there's also a separate car cost limit for depreciation ($69,674 for 2025–26) which caps how much you can claim.
Does the $20,000 apply per item or as a total across the year?
Per item. You can write off as many assets as you want, as long as each individual asset costs less than $20,000.
Can I claim it for second-hand assets?
Yes. The instant write-off applies to both new and second-hand assets.
What if I buy an asset in June 2026 but don't use it until July?
You can't claim it in the 2025–26 year. The trigger is when the asset is first used or installed ready for use — not the purchase date.
Can I still claim if I've opted out of simplified depreciation rules?
No. You must be using the simplified depreciation rules to access the instant asset write-off. If you opted out, you need to wait until you can opt back in (generally after a 2-year lock-out period, though this has been suspended for recent years — check with your accountant).
What happens if I sell an asset I instantly wrote off?
You may need to include a "balancing adjustment" in your tax return. If you sell the asset for more than its written-down value (which is $0 after an instant write-off), the sale proceeds are taxable income.
Is the instant asset write-off guaranteed to continue after June 2026?
No. The government has been extending it year by year. Whether it continues into the 2026–27 year will depend on the next federal budget announcement. Don't assume it will be there — plan your purchases accordingly.
Disclaimer: This guide provides general information about the instant asset write-off in Australia. It's not tax advice. Tax rules change frequently and your specific situation matters — always consult your accountant or registered tax agent before making financial decisions based on this information.