Following the 2026–2027 Federal Budget announcement, legislation has now passed making the $20,000 instant asset write-off a permanent feature of the tax system for eligible small businesses. This brings an end to the series of temporary extensions that have applied in recent years and provides greater certainty for businesses planning future capital expenditure.
The most significant aspect of the change is not how the concession operates, but that it is now permanent. Without the legislation, the threshold was scheduled to revert to $1,000 from 1 July 2026.
The write-off remains available to small businesses with aggregated turnover below $10 million that choose to use the simplified depreciation rules. Eligible businesses can immediately deduct the taxable-purpose portion of eligible depreciating assets costing less than $20,000. Both new and second-hand assets may qualify.
The threshold applies on a per-asset basis rather than as an annual spending limit. As a result, multiple qualifying assets can be immediately deducted, provided each individual asset costs less than $20,000 and the relevant eligibility requirements are satisfied.
Although the concession is now permanent, the timing rules remain unchanged.
To qualify, an asset must be first used, or installed ready for use, for a taxable purpose on or after 1 July 2026. Purchasing an asset alone is not sufficient. Advisers may wish to remind clients that delivery delays, installation timing and commissioning dates can all affect when a deduction becomes available.
Assets costing $20,000 or more are not eligible for the immediate deduction under the simplified depreciation rules. Instead, the taxable-purpose portion of the asset is generally allocated to the small business depreciation pool. Pool assets are generally depreciated at 15% in the first year and 30% in later years.
Importantly, where the balance of the small business pool falls below $20,000 after the relevant year-end adjustments, the remaining balance may still be deducted immediately.
The permanent extension may reduce the need for clients to make purchasing decisions around annual Budget announcements or pending legislation. It also allows businesses to incorporate the concession into longer-term replacement and investment plans with greater confidence.
However, advisers should continue to remind clients that the concession should not drive investment decisions on its own. Business need, expected commercial benefit, cash flow and financing arrangements remain equally important considerations.
For many clients, the most common questions are likely to be:
whether their turnover is below the eligibility threshold;
whether a particular asset qualifies;
whether the $20,000 threshold applies per asset or in total; and
whether the asset will be first used or installed ready for use in time to claim the deduction.
The permanent nature of the concession may simplify those conversations, but the existing eligibility and timing requirements will continue to be important when determining whether a deduction is available.
Source: www.ato.gov.au/about-ato/new-legislation/in-detail/businesses/20000-dollars-instant-asset-write-off
ATO: Instant asset write-off for eligible businesses