$20,000 instant asset write-off due for extension to 30 June 2026

Are you a small business owner planning to invest in new equipment or technology? The good news is that the government is planning to extend the $20,000 instant asset write-off by a further 12 months until 30 June 2026.

This measure was announced by the Treasurer as an election commitment on 4 April 2025 and is contained in the recently introduced Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025. The measure is not yet law.

What’s changing?

Once this Bill is passed, the $20,000 threshold will continue to apply until 30 June 2026.
Without this amendment, the threshold would have dropped back to the ongoing legislated level of $1,000 from 1 July 2025.

The extension applies to:

• eligible depreciating assets costing less than $20,000 each;
• eligible amounts included in the second element of an asset’s cost (cost additions); and
• general small business pools (enabling full write-off where the pool balance is below $20,000 at year end).

Who can benefit?

Small businesses that use the simplified depreciation rules and have an aggregated turnover of less than $10 million can continue to immediately deduct the business portion of the cost of eligible assets first used or installed ready for use by 30 June 2026. The write-off can apply to multiple assets, provided each individual asset is under the $20,000 limit.

How it works

• You claim the deduction in the income year the asset is first used or installed ready for use.
• There’s no cap on the number of assets; the limit applies per asset.
• Both new and second-hand assets can qualify, provided they’re eligible under simplified depreciation.
• If you previously wrote off an asset under simplified depreciation, the first deductible “second element” cost you incur in a later year can also be immediately deducted if it’s under $20,000 and is the first such addition after the original write-off.
• You must reduce the deduction for any private use portion; importantly, the entire asset cost must still be below $20,000, regardless of your business-use percentage.
• If you’re registered for GST and can claim full credits, assess the cost net of GST; if not registered, use the GST-inclusive cost.

What can you claim?

The instant asset write-off covers a wide range of business assets, including:

• office equipment and computers;
• tools and machinery;
• vehicles (subject to car limits);
• furniture and fittings; and
• new and second-hand assets.

However, there are some exclusions and special rules. For passenger vehicles, a car limit applies, and certain assets like those used primarily for research and development may not qualify.

When the limit is exceeded

If an asset’s total cost is $20,000 or more, it isn’t eligible for the instant write-off under the simplified rules. Instead, small businesses must allocate the business-use portion to the small business pool, where it depreciates at 15% in the first year and 30% thereafter. Similarly, if your general small business pool balance is below $20,000 at year end, you can deduct it in full.

Key points 

• You must be eligible for and apply the simplified depreciation rules.
• Some assets are excluded from simplified depreciation (for example, certain leased assets and assets allocated to low-value pools).
• The car limit can cap claims on passenger vehicles.
• Private use must be excluded from your deduction, and research and development use may affect eligibility.

If you’re considering making asset purchases for your business, this extension, once passed, will provide an opportunity to bring forward investments while maximising your tax benefits. Always consult with your tax adviser to ensure you’re making the most of this concession.

Source: www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/small-business-support-20000-dollar-instant-asset-write-off 
Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025