Instant Asset Write-Off 2026-27

The $20,000 instant asset write-off has been made permanent from 1 July 2026, ending years of annual extensions. Small businesses with aggregated turnover under $10 million can immediately deduct the full cost of eligible assets costing less than $20,000 each, and can claim multiple assets in the same year. Assets above the threshold can enter the simplified depreciation pool.

Data in this article is sourced from the ATO, the 2026-27 Federal Budget, and Treasury as at 5 July 2026.

What changed and why it matters

The $20,000 instant asset write-off, which has been extended on a year-by-year basis since the COVID-19 pandemic, was announced as a permanent measure in the 12 May 2026 Federal Budget. While the enabling legislation has not yet been passed, the government has committed to permanence and the ATO is administering the measure from 1 July 2026 on that basis.

For small business planning, permanence is transformative. Instead of wondering each year whether the write-off will be extended, businesses can now plan capital expenditure with certainty that the $20,000 threshold is here for the long term.

Who is eligible

Small business entities with aggregated annual turnover of less than $10 million. Aggregated turnover includes the turnover of connected entities and affiliates. The business must be carrying on a business in the relevant income year.

The asset must be:

First used or installed ready for use in the income year you claim the deduction
Used or installed ready for use for a taxable purpose
A depreciating asset for which a deduction is available

How the $20,000 threshold works

The write-off applies on a per-asset basis with no limit on the number of assets you can claim:

Each asset costing less than $20,000: full immediate deduction
Multiple assets allowed: buy five assets at $15,000 each = $75,000 deduction
The $20,000 threshold is the GST-exclusive cost for GST-registered businesses
For businesses not registered for GST, the GST-inclusive cost is used

Practical example

A GST-registered business purchases:

A ute at $35,000 (GST-exclusive): exceeds threshold, cannot use instant write-off
A laptop at $2,500: instant write-off
Office furniture at $8,000: instant write-off
A trailer at $12,000: instant write-off

Total instant deduction: $22,500. The ute goes into the simplified depreciation pool.

Simplified depreciation pool

Assets costing $20,000 or more that cannot use the instant write-off can enter the simplified depreciation pool:

First year deduction: 15% of the asset's cost
Subsequent years: 30% of the remaining pool balance
Pool balance under $20,000 at year-end: The entire remaining amount can be fully written off

The five-year restriction on re-entering the simplified depreciation regime after opting out has been suspended until 30 June 2027.

Pool example

The $35,000 ute entering the pool:

Year 1: $35,000 x 15% = $5,250 deduction; pool balance $29,750
Year 2: $29,750 x 30% = $8,925 deduction; pool balance $20,825
Year 3: $20,825 x 30% = $6,248 deduction; pool balance $14,578
Year 4: Pool balance under $20,000 — remaining $14,578 fully deducted

What qualifies

Most depreciating assets used in your business are eligible:

Tools, equipment, and machinery
Computers, tablets, and business phones
Office furniture and fittings
Motor vehicles (subject to the car limit)
Shop fittings and displays
Office equipment

Both new and second-hand assets qualify.

What does not qualify

Buildings and structural improvements (capital works — different rules apply)
Trading stock
Assets leased to another party
Software allocated to a software development pool
Horticultural plants

FAQ

Is the $20,000 instant asset write-off really permanent?

The government announced permanence in the 12 May 2026 Budget. The legislation has not yet been passed, but the ATO is administering the measure from 1 July 2026 and both major parties have supported the write-off in various forms. For practical purposes, businesses can plan on the $20,000 threshold remaining.

Can I claim the write-off on a car?

Yes, but the car limit applies to passenger vehicles. If the vehicle cost exceeds the car limit (indexed annually), the deduction for the vehicle itself is capped at the car limit.

What if I buy multiple assets that individually cost less than $20,000?

You can claim the instant write-off on each one. There is no aggregate limit on the number of assets or the total deduction amount.

What happens to assets I already own?

The instant asset write-off applies to assets first used or installed ready for use in the 2026-27 income year. Existing assets already in your depreciation schedule continue to be depreciated under their existing method.

Can I use the write-off if my turnover is exactly $10 million?

No. The threshold is aggregated annual turnover of less than $10 million. At $10 million or above, the standard depreciation rules apply (including the general small business simplified depreciation rules if you are a small business entity under the $10 million test for other purposes).