What is instant asset write-off
The instant asset write-off allows an eligible small business to deduct the full cost of a qualifying asset in the year it's first used, instead of depreciating it over several years.
An eligible asset that costs less than the threshold is deducted in the financial year you first use it or have it installed ready for use. Anything at or above the threshold goes into your small business pool instead.
You get the same total deduction either way. The only thing that changes is when you get it. Depreciation spreads the benefit across the years an asset is expected to last, while the write-off gives you all of it in a single return.
Bringing the deduction forward helps your cash flow, but it doesn't reduce what you pay for the asset.
Why the instant asset write-off exists
The AUD $20,000 threshold arrived in the 2015–16 Budget as an investment incentive. The deduction itself was never bigger under the write-off than under normal depreciation. It just arrived sooner, and arriving sooner is what changes a purchase decision.
A founder deciding on a AUD $15,000 machine in March responds differently to a full deduction this year than to a sliver of one across the next five.
What followed was a decade of renewals. That is the part that changed on 19 Aug 2026, and it is the reason this year's rules read differently from every version before them.
Instant asset write-off rules for 2026
There are two different answers here depending on which income year you're claiming for, and mixing them up is the easiest way to get this wrong.
[Table:1]
Status as of 21 Aug 2026. Confirm where the Bill sits on the ATO legislation page before you lodge.
What's settled for 2025–26
For 2025–26, eligible assets costing less than AUD $20,000 are deductible in full in that year's return. The only condition is timing: the asset has to be first used, or installed ready for use, for a taxable purpose between 1 Jul 2025 and 30 Jun 2026.
The limit applies to each asset separately. If you bought four items at AUD $8,000 each, you write off all four.
You can also immediately deduct the first improvement cost on an asset you wrote off in an earlier year, as long as that cost was incurred in the same window and comes in under AUD $20,000.
What's announced for 2026–27
The change comes through the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, which passed both houses on 19 Aug 2026. It makes the AUD $20,000 threshold permanent from 1 Jul 2026 for businesses meeting the eligibility criteria. There is no end date and no annual renewal to wait on.
The legislation also keeps the lock-out rules suspended until 30 Jun 2027. If you opted out of simplified depreciation in an earlier year, you can come back in now instead of waiting five years. That window does close, so it is the one date in this piece still worth putting in the calendar.
Who's eligible for instant asset write-off
1. Business turnover should be under AUD $10 million
Your aggregated annual turnover must be under AUD $10 million. Aggregated means your own turnover plus the turnover of any connected entities and affiliates, not just the entity making the purchase.
Founders running two companies under common ownership get this wrong regularly. Both sets of revenue count towards the same threshold.
2. You have to use simplified depreciation
The instant asset write-off sits inside the simplified depreciation rules. If you haven't elected to use those rules for the income year, you can't access the write-off at all.
It's also why the lock-out suspension matters, because it lets businesses that opted out in an earlier year come back in.
Before you elect in, note that the choice applies to every depreciating asset you hold that year, not just the one you are writing off. Run it past your accountant or tax agent first.
3. Asset cost should be under the threshold
If you're GST registered, you can claim the full credit and use the GST-exclusive price as deduction. If you're not registered, use the GST-inclusive price.
For example, an asset priced at AUD $21,500 including GST can still clear the threshold once the GST comes out.
4. Cut-off for every financial year
The asset has to be first used, or installed ready for use, for business by 30 Jun of that year. For a 2025–26 claim, that is 30 Jun 2026. For 2026–27, it is 30 Jun 2027. The threshold is permanent now, so the same test applies every year after.
Buying it is not enough. If the asset is still in transit on 30 Jun, it counts in the next year's claim, no matter how early you ordered it.
Note: instant asset write-off for sole traders
Sole traders qualify on the same terms as companies. They face the same turnover test, the same simplified depreciation requirement, and the same per-asset threshold.
What differs is the value of the deduction. A company applies one flat tax rate to its profit. A sole trader's deduction comes off income that's taxed at marginal rates, so what the deduction is worth moves with the rest of your income for that year.
In a low-income year, the same deduction is worth less than it would be in a strong one. That makes the timing of a purchase worth thinking about, not just the purchase itself.
What you can and can't claim
The instant asset write-off rules cover most of what you'd buy to run a business, with a short list of exclusions and one cap that applies to vehicles.
Assets that qualify
The rules apply to most depreciating assets, including computers, laptops and tablets, motor vehicles, office equipment, freestanding office furniture, and tools and machinery.
New and second-hand assets both qualify. The cost includes what you paid plus transport and installation.
Excluded assets
A short list of assets falls outside the simplified depreciation rules. These use the general depreciation rules instead:
- Assets leased out, or expected to be leased out, more than 50% of the time
- Assets used in your research and development activities
- Assets already allocated to a low-value pool before you started using simplified depreciation
- Capital works, including buildings and structural improvements
- Horticultural plants, including grapevines
- Software allocated to a software development pool, though other software is fine
The car limit
Passenger vehicles that carry under one tonne and fewer than nine passengers are capped by the car limit. For 2026–27 that limit is AUD $69,883, up from AUD $69,674 in 2025–26.
In practice the car limit rarely matters here, because the write-off threshold sits so far below it. At AUD $20,000 you're looking at motorcycles, small commercial vehicles, and second-hand utes rather than a new passenger car.
Did you know: a trade-in doesn't reduce your asset's cost for these purposes. If you trade an old vehicle in at AUD $11,000 against a AUD $25,000 replacement, you're only AUD $14,000 out of pocket, but the ATO treats it as two separate transactions. The asset cost AUD $25,000, which is over the threshold, so it goes into the pool instead. It's easy to budget against the cash you hand over and lose the claim without realising.
How the instant asset write-off works in practice
A deduction reduces the income you pay tax on, which is not the same as getting your money back.
Take a company that qualifies as a base rate entity and pays 25% as company tax. It buys an AUD $12,000 piece of equipment, GST-exclusive, and uses it entirely for business.
[Table:2]
You still move AUD $12,000 out of the business today in order to save AUD $3,000 at lodgement. That's a 25% discount on something you were going to buy anyway.
This is the simplified version of write-off. What the deduction is actually worth depends on your tax rate, how much of the asset is used for business, and how much taxable income you have that year.
If the deduction is larger than your profit, it does not come back as a refund. It creates or adds to a tax loss, which you carry forward to a year with income to offset.
How to claim the instant asset write-off in 2026
The instant asset write-off rules don't require a separate form or any pre-approval. The real work is in what you can prove afterwards.
Records you need to hold
The ATO expects your records to prove four things: what the asset cost, when you first used it or had it installed ready for use, that you used it for a taxable purpose, and what share of that use is business rather than private.
That means keeping the purchase invoice, evidence of delivery or installation, and a clear basis for your business-use percentage. For vehicles, that basis is a valid logbook.
Claims tend to fall apart when all of this gets reconstructed months later from a folder of loose receipts. It's much easier when the paper trail builds itself as you spend.
Aspire can help keep purchase records easier to find by attaching receipts to transactions and syncing spend data to accounting tools. Your accountant or tax agent should still confirm deductibility.
Apportioning business and private use
You can only deduct the business portion of an asset. An AUD $4,000 laptop used 80% for business gives you a AUD $3,200 deduction rather than AUD $4,000.
The threshold test and the deduction test work differently. Eligibility looks at the full cost of the asset. The deduction is then reduced to your business-use share.
The bottom line
Instant asset write-off rules reward a purchase you were already going to make. They don't turn an unnecessary one into a good decision. Even at 25% tax rate, three quarters of the money still leaves your account.
One cost the tax rules do not touch. If you are importing the equipment, the exchange rate you get can move the price as much as the deduction does, and you pay it months before you claim anything back.
That sits outside the write-off, but it is worth thinking about how you pay. Aspire's corporate cards earn unlimited 1% cashback on FX spend, and the multi-currency business account lets you hold and pay in your supplier's currency instead of converting twice. Local NPP and BECS transfers are free.
Frequently asked questions
What is the instant asset write-off threshold right now?
AUD $20,000, and it's now permanent. Parliament passed the enabling legislation on 19 Aug 2026, so the same threshold applies for 2025–26 and every year after.
How does the instant asset write-off work for multiple assets?
The limit applies to each asset separately, so you can write off as many qualifying assets as you buy in a year as long as each one costs less than the threshold. Five items at AUD $9,000 each give you five separate full deductions.
Can sole traders claim the instant asset write-off?
Yes, and on the same terms as any other structure. You need aggregated turnover under AUD $10 million and you need to elect to use simplified depreciation. The deduction then reduces taxable income at your marginal rate rather than at a flat company rate.
What happens to assets over the threshold?
They go into your small business pool and depreciate at 15% in the first income year and 30% each year after that. If the pool balance falls under the write-off threshold at the end of an income year, you can write off the whole balance.
Does the instant asset write-off apply to cars?
Yes, but the car limit caps the cost you can use for a passenger vehicle, and that limit is AUD $69,883 for 2026–27. In practice the write-off threshold is the tighter constraint, so this matters more for motorcycles and small commercial vehicles than for a new passenger car.
What if I sell an asset I've already written off?
You include the business-use portion of the sale proceeds in your assessable income for that year. The same applies to an insurance payout if the asset is destroyed.
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