For years, small business owners have had to wait and see whether the $20,000 instant asset write-off would survive another federal budget. That uncertainty is finally over. The 2026–27 Federal Budget has permanently locked in the threshold and with 1 July 2026 just weeks away, now is the right time to understand what it means for your purchasing decisions.
What Is the Instant Asset Write-Off?
The instant asset write-off allows eligible small businesses to immediately deduct the full purchase cost of an asset in the year it’s first used (or installed ready for use), rather than claiming it gradually over multiple years through depreciation. The benefit is a larger deduction upfront, reducing your taxable income in the year you make the investment.
What’s Changed?
Until now, the $20,000 threshold had to be renewed through each year’s federal budget creating real uncertainty for business owners trying to plan ahead. Under the proposed 2026–27 Budget, the instant asset write off is permanently extended. Once the bill is passed, you will no longer need to delay equipment purchases waiting to see what the budget would bring.
Who Is Eligible?
The instant asset write-off is available to businesses with an aggregated annual turnover of less than $10 million. Each eligible asset must cost less than $20,000. The instant asset write-off applies on a per asset basis, meaning that you can purchase 10 different assets which are all valued under $20,000 and immediately write off each asset.
What Types of Assets Qualify?
Most tangible business assets are eligible. Examples include equipment, tools, technology, furniture, and fit-out items among them. If an asset is used partly for business and partly for personal purposes, you can still claim, but only the business-use proportion.
Timing Is More Important Than It Looks
The asset must be first used or installed ready for use before 30 June of the income year you’re claiming. It is not enough to merely purchase the asset. You must also receive the asset for it to be able to be deducted.
What About Assets Over $20,000?
Assets costing $20,000 or more don’t qualify for the instant write-off, but they don’t simply fall away, they generally enter a small business depreciation pool (sometimes referred to as the general pool). The small business depreciation pool has fixed depreciation rates, depending on when the asset is acquired. If the asset was acquired during the financial year, those specific assets are depreciated at 15% of the total purchase value. Unlike ordinary depreciation, this 15% amount does not take into account the days held in the year. For all other assets which were acquired in a previous financial year, the pool is depreciated at 30%.
Another mechanism of the small business pool is that the pool my be immediately depreciated in full, if the balance is under $20,000 before taking into account any depreciation for the year.
As the small business pool rules are complicated in practice, it is best to talk to your tax practitioner to ensure that your depreciation is recorded correctly for taxation purposes as some accounting systems may not be designed to record depreciation in this manner accurately.
Why Permanence Matters
The real value of making this threshold permanent isn’t just the deduction itself but the certainty it gives you as a business owner. You can now plan capital investment on your own timeline, confident the rules won’t shift under you each May. That’s a genuine improvement for any small business looking to reinvest.
If you’d like to understand how the instant asset write-off applies to your specific situation including what qualifies, how to time your purchases, and how it affects your overall tax position we can help. Get in touch with the Spot On team.
This article is based on the 2026–27 Federal Budget announcement and is general in nature. It does not constitute financial or tax advice. Budget measures may be subject to change prior to legislated enactment. Please speak with a registered tax agent to understand how these changes apply to your individual circumstances.
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