What Is the Instant Asset Write-Off Threshold This Year?

The $20,000 instant asset write-off in 2025-26 and 2026-27

Small businesses with aggregated turnover under $10 million can deduct the full cost of an eligible depreciating asset costing less than $20,000 in the year it is first used or installed ready for use. The limit was $20,000 for 1 July 2025 to 30 June 2026.

In the 2026-27 Budget on 12 May 2026, the government announced the $20,000 limit would become permanent from 1 July 2026. The ATO now says the measure is law, so the threshold no longer needs to be renewed each year.

The deduction is claimed in the tax return for the income year in which the asset is first used or installed ready for use, not the year you paid for it or ordered it. An asset bought in June but not installed until July is deducted in the following year.

How the per-asset rule works

The $20,000 limit applies to each asset separately, so you can write off several assets in the same year as long as each one costs less than $20,000. There is no overall cap on the number of assets.

New and second-hand assets generally both qualify, subject to the usual exclusions. Improvements to an asset you have already written off can also be deducted immediately if the improvement costs less than $20,000 and is the first such cost after the year the asset was written off.

• Each asset must cost less than $20,000
• No limit on the number of eligible assets
• New and second-hand assets generally qualify
• Deduct in the year first used or installed ready for use

Assets of $20,000 or more: the small business pool

Assets that cost $20,000 or more cannot be written off immediately, but they can go into the small business simplified depreciation pool. The pool is depreciated at 15% in the first income year and 30% in each later year.

If the pool's closing balance at the end of an income year is less than $20,000, you can write off the whole balance. Businesses that previously opted out of simplified depreciation would normally be locked out for 5 years, but that lock-out is suspended until 30 June 2027.

Worked example

Say a Brisbane business with $3 million turnover uses simplified depreciation. In 2026-27 it buys a commercial oven costing $12,000, first used on 15 March 2027, and a laptop costing $2,500, installed ready for use in August 2026. Both cost less than $20,000, so it deducts $14,500 in full in its 2026-27 return.

It also buys a machine costing $25,000. That is over the limit, so it goes into the small business pool and is depreciated at 15% in 2026-27, which is $3,750. In 2027-28 the pool rate is 30% of the remaining balance.

When to get help

A write-off is a deduction, not free money: you still spend the cash, and it only saves tax at your marginal or company rate. Buying an asset you do not need to save tax usually leaves you worse off.

The timing of first use matters at year end, so plan purchases before June rather than after. Acquire Strategic Accounting in Brisbane can check eligibility and how a purchase fits your tax plan.