The $20,000 Instant Asset Write-Off

The instant asset write-off is one of the more useful tax concessions available to small businesses. It lets eligible businesses claim an immediate deduction for the full cost of a qualifying asset in the year it’s purchased, rather than depreciating that cost gradually over several years. The current threshold is $20,000 per asset and for businesses registered for GST, that figure is GST-exclusive. 

How it works 

Instead of spreading a deduction across the life of an asset, you claim the whole amount upfront. For many businesses that means a larger deduction sooner, reducing taxable income in the year of purchase and helping cash flow. 

A few points to note: 

• The $20,000 limit applies to each asset, not to your business as a whole. You can write off multiple assets in the same year, as long as each one costs less than $20,000. 

• You claim the business-use portion only. If an asset is used partly for private purposes, you deduct just the percentage that relates to business use. 

• The asset must be in use, not just paid for. It has to be first used, or installed ready for use, for a business purpose within the income year. Allow time for delivery and installation when planning a purchase. 

Who is eligible? 

To use the instant asset write-off, your business generally needs to have an aggregated annual turnover of less than $10 million and be using the simplified depreciation rules. Sole traders, partnerships, companies and trusts can all qualify if they meet these conditions. 

Assets costing $20,000 or more 

If an asset costs $20,000 or more, it can’t be written off immediately. Instead, it goes into the small business general pool and is depreciated at 15% in the first year and 30% each year after that. 

Looking ahead 

The current $20,000 instant asset write-off is scheduled to end on 30 June 2026.   However, the Government has announced plans that the $20,000 instant asset write-off will be made permanent from 1 July 2026, providing small businesses with greater certainty when planning equipment purchases and investments, but this is not yet law. 

How we can help 

The instant asset write-off can be a valuable tax-planning tool, but eligibility, timing, business-use apportionment and the treatment of larger assets can get technical. If you’re considering a purchase and want to understand how the rules apply to your circumstances, please get in touch.