Instant Asset Write-Off 2026: What's Changed, What It Means, and Why Timing Matters

Every year it's the same dance. The government extends the instant asset write-off. Business owners breathe a sigh of relief. Accountants send emails. And then 12 months later, everyone does it again.

But this year, the stakes are higher — because unless something changes, the music stops on 30 June 2026. Here's what you need to know, what's actually different this time, and how to make the most of it before the window closes.

What the instant asset write-off actually does

The instant asset write-off lets eligible small businesses immediately deduct the full cost of an asset in the year they start using it — instead of depreciating it over several years. Buy a $15,000 piece of equipment in March, start using it in March, and deduct the full $15,000 on this year's tax return. No spreading it across five years. No depreciation schedules.

For the 2025–26 financial year, the rules are:

• Threshold: $20,000 per asset (GST-exclusive if you're registered for GST)
• Eligibility: Small businesses with aggregated turnover under $10 million
• Assets: New and second-hand — both qualify
• Deadline: The asset must be first used or installed ready for use by 30 June 2026
• Multiple assets: The $20,000 limit is per asset, so you can write off multiple purchases

Assets that cost $20,000 or more go into the small business depreciation pool instead, where they're depreciated at 15% in the first year and 30% each year after that.

A short history of a policy that keeps coming back

The instant asset write-off was introduced by the Abbott government in the May 2015 budget, lifting the threshold from $1,000 to $20,000 for small businesses. It was meant to be temporary — a one-year stimulus measure.

That was 11 years ago.

Since then, the threshold has been extended or changed in virtually every budget:

• 2015–2019: $20,000 threshold for businesses under $10 million turnover
• January 2019: Bumped to $25,000 under the Morrison government
• April 2019: Raised again to $30,000, with eligibility expanded to businesses up to $50 million turnover
• March 2020: Lifted to $150,000 as a COVID-19 stimulus measure
• October 2020–June 2023: Replaced entirely by temporary full expensing — which let businesses of virtually any size write off assets of any value. A $500,000 excavator? Deductible in one year. This was the most generous version the scheme has ever taken.
• July 2023–June 2024: Back to the $20,000 threshold after temporary full expensing expired. The legislation didn't pass until June 2024 — days before the deadline.
• July 2024–June 2025: Extended again at $20,000. Again, the legislation passed late.
• July 2025–June 2026: Extended again at $20,000. This time, the legislation passed in November 2025 — early by recent standards, but still halfway through the financial year.

The pattern is clear: a "temporary" measure that no government has been willing to let expire, but no government has been willing to make permanent either.

What happens after 30 June 2026?

This is the part that matters most.

As the legislation currently stands, the threshold reverts to $1,000 on 1 July 2026. That's not a typo. One thousand dollars. The original threshold from before the scheme was introduced in 2015.

At $1,000, the instant write-off is essentially useless for any meaningful business purchase. A decent power tool costs more than that. A laptop costs more. The practical effect would be that most asset purchases go back into the depreciation pool, and business owners go back to claiming small amounts over multiple years.

Will it actually revert? History says probably not — the government has extended it every single year for the past decade. But "probably" isn't certainty, and that's exactly the problem.

The political tug-of-war

The instant asset write-off has become one of the most contested small business policies in Australia. Here's where the major parties stand:

Labor (in government): Has extended the $20,000 threshold on a year-by-year basis. Prime Minister Albanese has argued that annual extensions are deliberate — the point is to encourage businesses to invest now rather than defer purchases indefinitely. Labor and the Greens voted down an amendment in November 2025 that would have lifted the threshold to $30,000 and extended it to 2030. No commitment has been made beyond 30 June 2026.

The Coalition: Went to the 2025 federal election with a pledge to make the instant asset write-off permanent at $30,000 — a higher threshold than Labor's $20,000, locked in so businesses wouldn't face the annual uncertainty. The Parliamentary Budget Office costed the proposal. The Coalition lost the election, but the policy remains their position.

Industry groups: The Council of Small Business Organisations (COSBOA) has called for a permanent threshold of $150,000 — matching the COVID-era level — arguing that $20,000 "falls well short of supporting meaningful upgrades in equipment, vehicles, technology and digital tools." Chartered Accountants Australia and New Zealand has also called for permanence, arguing that the year-by-year approach creates compliance costs and uncertainty that undercut the incentive's effectiveness.

The core tension: Labor sees the annual extension as a feature, not a bug — it creates urgency. Critics see it as a planning headache that forces business owners to make investment decisions without knowing the rules 12 months out.

The traps to watch

The rules sound simple, but the common mistakes are surprisingly costly:

The total cost rule. The $20,000 threshold applies to the total cost of the asset, not just the business portion. If you buy a ute for $40,000 and use it 50% for business, the total cost ($40,000) exceeds $20,000 — so it doesn't qualify for the instant write-off, even though the business portion is only $20,000. It goes into the depreciation pool instead.

"Ready for use" means ready for use. Ordering or paying for an asset before 30 June isn't enough. The asset must be physically delivered, installed, and ready to use for a business purpose by 30 June 2026. If you order equipment in May and it arrives in August, you've missed the window.

The car limit. Passenger vehicles (designed to carry fewer than 9 passengers with a payload under one tonne) are subject to a separate depreciation car limit — $69,674 for 2025–26. Even if the car costs less than $20,000 (unlikely), the total cost of the car can't exceed the instant write-off threshold. For most business cars, the car limit applies and the vehicle goes into the depreciation pool.

Private use apportionment. If an asset is used partly for personal purposes, you can only claim the business portion. But the $20,000 threshold test is still applied against the total cost. This trips up a lot of people.

Aggregated turnover. The $10 million turnover test includes connected entities and affiliates, not just your individual business. If you run multiple businesses or have related entities, your combined turnover might push you over the threshold.

How to think about this before 30 June

If you've been putting off an equipment upgrade, a tool replacement, or a technology purchase — and the asset costs less than $20,000 — the next 13 weeks are your window.

But don't buy things just for the tax deduction. The write-off reduces your taxable income, not your tax bill dollar-for-dollar. On a $19,000 asset, a business paying the 25% company tax rate saves $4,750 in tax. That's meaningful — but you're still spending $14,250 net. The purchase needs to make business sense first.

Here's a practical approach:

1. List the assets you've been considering. Equipment, tools, technology, fit-out items. Which ones are under $20,000?
2. Talk to your accountant before you buy. Confirm your aggregated turnover, check your eligibility, and model the tax impact for your specific structure.
3. Check the total cost. Remember — it's the full cost of the asset, not your share or the business portion. If it's over $20,000, it goes to the depreciation pool.
4. Plan delivery dates. If you're buying in May or June, confirm the asset can be delivered and installed before 30 June. Don't leave it to the last week.
5. Consider financing. You don't need to pay cash to claim the write-off. If you finance a $19,000 piece of equipment, you can still write off the full $19,000 — you're deducting the cost of the asset, not the repayments. This means you keep your cash and still get the tax benefit.

If you're weighing up equipment finance and want to compare structures across 50+ lenders, Emu Money's finance specialists can help you find the right fit.