Permanent $20,000 Instant Asset Write-Off: What It Means for Your Small Business

Key takeaways

• Parliament passed legislation on 19 August 2026 to make the $20,000 Instant Asset Write-Off a permanent feature of the tax system from 1 July 2026, ending more than a decade of temporary extensions.
• Eligible small businesses with an aggregated annual turnover of less than $10 million can immediately deduct the business-use portion of eligible assets costing less than $20,000 each, subject to the simplified depreciation rules and other eligibility requirements.
• The $20,000 threshold applies on a per-asset basis. Assets costing $20,000 or more generally enter the simplified depreciation pool, where they are depreciated at 15% in the first income year and 30% in subsequent years.
• A tax deduction should not be the reason to make a purchase. The asset should still make commercial sense and support the needs and goals of the business.

Is the $20,000 Instant Asset Write-Off now permanent?

Yes. In August 2026, Parliament passed legislation to make the $20,000 Instant Asset Write-Off permanent for eligible small businesses from 1 July 2026.

For years, small business owners have faced the same question approaching the end of the financial year: will the Instant Asset Write-Off be extended again?

Making the $20,000 threshold permanent removes much of that uncertainty and allows businesses to plan future investment without relying on another annual extension.

Eligible small businesses with an aggregated annual turnover of less than $10 million will be able to immediately deduct the business-use portion of eligible assets costing less than $20,000 each, subject to the simplified depreciation rules and other eligibility requirements.

In this article, our small business accountants in Melbourne explain what the permanent Instant Asset Write-Off covers, why the change matters and what to consider before purchasing equipment, vehicles or technology for your business.

Thinking about your next equipment or technology purchase? Call (03) 9589 5488 or submit an enquiry to speak with the experienced accountants at Bruce Edmunds & Associates.

What the permanent Instant Asset Write-Off covers

The Instant Asset Write-Off allows eligible small businesses to immediately deduct the business-use portion of the cost of an eligible depreciating asset, rather than claiming depreciation over several years.

From 1 July 2026, eligible small businesses with an aggregated annual turnover of less than $10 million that use the simplified depreciation rules can:

• Immediately deduct the business-use portion of eligible assets costing less than $20,000
• Apply the $20,000 threshold on a per-asset basis, meaning multiple eligible assets may qualify during the same financial year
• Continue using the simplified depreciation rules that support the deduction
• Plan future asset purchases without relying on another annual extension of the $20,000 threshold

Assets costing $20,000 or more will generally enter the small business simplified depreciation pool. These assets are generally depreciated at 15% in the first income year and 30% in each subsequent income year.

Eligibility can depend on your business structure, aggregated turnover, use of the simplified depreciation rules and when the asset is first used or installed ready for use.

Some assets may also be subject to exclusions or other tax rules, so it is worth checking your position with your accountant before making a significant purchase.

Why permanency matters more than the deduction itself

For many business owners, the uncertainty surrounding the Instant Asset Write-Off has been almost as challenging as the tax rules themselves.

The threshold has changed several times over the years and has often relied on new legislation being passed before the end of the financial year.

In August 2026, Parliament passed legislation to make the $20,000 Instant Asset Write-Off permanent from 1 July 2026.

Making the $20,000 threshold permanent allows small businesses to plan expenditure based more closely on their actual business needs rather than waiting to see what happens with the legislation each year.

The Government says around 300,000 small businesses claimed the Instant Asset Write-Off in the 2024-25 financial year, arguing the take-up shows the importance of giving businesses long-term certainty.

With a permanent threshold, business owners can more confidently:

• Plan capital expenditure around genuine business requirements
• Develop longer-term equipment and technology replacement plans
• Budget and forecast future expenditure
• Reduce uncertainty around the timing of qualifying asset purchases
• Avoid making unnecessary last-minute purchases simply because the end of the financial year is approaching

What businesses may want to review

The permanent threshold provides a good opportunity to review upcoming investment plans rather than simply reacting at the end of each financial year.

Some areas to consider include:

Technology and systems

Are outdated computers, hardware or other technology slowing your team down or creating unnecessary security or productivity risks?

Vehicles and equipment

Are ageing vehicles, machinery or equipment resulting in increasing maintenance costs, downtime or reduced efficiency?

Productivity tools

Would automation, specialised equipment or improved systems help your team work more efficiently?

Growth plans

Are there investments planned over the next financial year that could help your business expand, improve capacity or introduce a new service?

The tax treatment is only one part of the decision. Each purchase should make sense for the business itself.

A tax deduction is not a reason to buy

A common misconception is that a business should purchase an asset simply because the cost can be claimed as a tax deduction.

An immediate deduction does not mean the asset is free.

The business still has to pay for the asset, and the deduction only reduces taxable income subject to the business’s circumstances and applicable tax treatment.

The Instant Asset Write-Off is just one of the small business tax deductions that may be available, depending on your circumstances.

Before committing to a purchase, consider:

• Whether the asset is genuinely needed
• The expected productivity or revenue benefit
• Ongoing operating and maintenance costs
• The impact on business cash flow
• Any financing arrangements
• The expected return on investment

A sound business purchase should make commercial sense first. Any tax benefit should support the decision rather than drive it.

Timing and documentation still matter

Even with a permanent threshold, businesses still need to meet the relevant eligibility requirements.

Importantly, an asset generally needs to be first used or installed ready for use during the income year in which the deduction is claimed.

Simply ordering an asset or receiving an invoice before the end of the financial year may not be enough.

Before finalising a purchase, make sure:

• Appropriate documentation supporting the purchase and business use is retained
• The asset is recorded against the correct business entity
• The business-use portion is correctly identified
• Eligibility is confirmed before relying on the deduction
• Tax planning is reviewed before year-end rather than after it

Good records and correct timing are also important for ATO compliance and can make a significant difference if the ATO later reviews the claim.

How Bruce Edmunds & Associates can help

The permanent $20,000 Instant Asset Write-Off gives small businesses more certainty when planning future investment, but getting the best outcome still comes down to making informed financial and tax decisions.

Our Melbourne business accountants can help you:

• Confirm whether your business is eligible for the simplified depreciation rules
• Review planned asset purchases alongside your cash flow and broader business goals
• Consider the timing and tax treatment of upcoming purchases
• Understand how an asset purchase may affect your tax position
• Develop longer-term capital expenditure and depreciation strategies

Tax concessions are most useful when they form part of a considered business and tax plan rather than a last-minute decision made at the end of the financial year.

If you’re planning an equipment, vehicle or technology purchase, or you want to understand how the permanent $20,000 Instant Asset Write-Off may apply to your business, call (03) 9589 5488 or submit an enquiry to speak with the Melbourne-based accounting team at Bruce Edmunds & Associates.

Frequently asked questions

Is the $20,000 Instant Asset Write-Off permanent now?

Yes. Parliament passed legislation in August 2026 to make the $20,000 Instant Asset Write-Off permanent for eligible small businesses from 1 July 2026. This removes the need for the threshold to be renewed each year.

What can I claim under the Instant Asset Write-Off?

Eligible small businesses can immediately deduct the business-use portion of eligible assets costing less than $20,000 each, provided the relevant eligibility and simplified depreciation requirements are met.

The threshold applies on a per-asset basis, so multiple qualifying assets may be eligible during the same income year.

What happens to assets that cost $20,000 or more?

Assets costing $20,000 or more generally do not qualify for the immediate write-off.

Instead, they generally enter the small business simplified depreciation pool, where they are depreciated at 15% in the first income year and 30% in each subsequent income year.

When does an asset need to be purchased to claim the deduction?

The purchase date alone does not determine eligibility.

The asset generally needs to be first used or installed ready for use during the income year in which the deduction is claimed.

An invoice or purchase order by itself may not be enough, so the timing of installation and use should be considered carefully.

Should I buy an asset just to get the tax deduction?

No. A tax deduction reduces taxable income, but it does not remove the cost of purchasing the asset.

The purchase should make commercial sense based on the genuine needs of the business, expected productivity or revenue benefits, ongoing costs and cash flow. Any tax benefit should be considered a secondary factor.

This article contains general information only and does not constitute tax, accounting, financial or legal advice. Tax laws and guidance can change, and individual circumstances vary. Professional advice should be obtained before making business or investment decisions.