Tax & ATO
IAWO
The instant asset write-off is a small business tax concession that lets you deduct the full cost of an eligible asset in the year it is first used or installed ready for use. For 2025-26 the threshold is $20,000 per asset, for businesses with aggregated turnover under $10 million.
Normally a business asset is depreciated over its effective life, with a slice deducted each year. The instant asset write-off short-circuits that: if the asset costs less than the threshold, the whole amount is deducted in the year the asset is first used or installed ready for use. For 2025-26 the threshold is $20,000, available to businesses with aggregated turnover under $10 million that use the simplified depreciation rules, for assets first used or installed ready between 1 July 2025 and 30 June 2026.
The threshold applies per asset, so a business can write off several assets in the same year, each under $20,000. New and second-hand assets both qualify. If you are registered for GST, the test applies to the GST-exclusive cost (you claim the GST separately as a credit on your BAS); if you are not registered, the GST-inclusive price counts. Assets used partly for private purposes are apportioned: only the business percentage is deductible, although the full cost is what is tested against the threshold. Full details are in the ATO's instant asset write-off page on ato.gov.au.
The threshold is legislated one year at a time, which is why the figure keeps making budget-night headlines. The recent history looks like this:
| Financial year | Threshold per asset | Turnover test |
|---|---|---|
| 2023-24 | $20,000 | Under $10 million |
| 2024-25 | $20,000 | Under $10 million |
| 2025-26 | $20,000 | Under $10 million |
| 2026-27 | Not yet legislated (defaults to $1,000) | Under $10 million |
Unless Parliament passes another extension, the threshold reverts to the base $1,000 from 1 July 2026. That makes timing genuinely important: an asset installed ready for use on 30 June falls under this year's rules, the same asset delivered a week later falls under next year's. Do not plan a large purchase around a threshold that has only been announced and not yet legislated; check the current status on the ATO page above before you commit.
A cafe with $900,000 turnover buys a commercial oven for $18,000 excluding GST in March 2026 and has it installed the same week. Because the cost is under $20,000, the full $18,000 is deducted in the 2025-26 return. At the 25 per cent company tax rate that reduces tax by $4,500; for a sole trader on the 30 per cent marginal rate the saving is $5,400 plus Medicare levy.
The same cafe also buys a $26,000 coffee roaster. That asset exceeds the threshold, so it goes into the small business depreciation pool instead: 15 per cent ($3,900) is deducted in the first year and 30 per cent of the remaining balance in each later year. If the whole pool balance falls below $20,000 at year end, the entire balance is written off. One more wrinkle for vehicles: the car limit caps the depreciable cost of passenger cars ($69,674 for 2025-26), though utes and vans built to carry one tonne or more are outside it. Model the alternatives with the OneBookPlus depreciation calculator.
The write-off is a deduction, not a rebate. Spending $20,000 saves you $20,000 multiplied by your tax rate (usually $5,000 to $9,400), so buying something the business does not need is still a net cash outflow. The concession changes when you get the deduction, not whether the purchase makes sense.
Watch the installed-ready-for-use test. Paying a deposit before 30 June is not enough: the asset must actually be delivered and ready to operate in the income year you claim it. Watch private use: a laptop used 60 per cent for business only yields a 60 per cent deduction. And remember the threshold test is per asset at cost, so you cannot split one $30,000 machine into two invoices to sneak under the cap; a composite item that functions as a single asset is tested as one. Finally, keep the invoice and proof of first use. The write-off is only available if you elect to use simplified depreciation for all your eligible assets, so mixing and matching with general depreciation rules on other equipment is not allowed while the election stands.
The definitions above only get you so far; the free OneBookPlus depreciation calculator turns them into your own figures in seconds, no sign-up needed.
Yes. The $20,000 threshold for 2025-26 applies per asset, so a business can immediately deduct several separate assets in the same year, provided each one individually costs less than the threshold and the business meets the under-$10 million turnover test.
It depends on your registration. If you are registered for GST, the threshold is tested against the GST-exclusive cost, and you claim the GST as an input tax credit on your BAS. If you are not registered, the GST-inclusive price is what counts.
It cannot be written off immediately. Under simplified depreciation it enters the small business pool, deducted at 15 per cent in the first year and 30 per cent of the remaining balance each year after. If the pool balance drops below the threshold at year end, the whole balance is deducted.
Last reviewed and updated: by Bishal Shrestha