Tax
The $20,000 Instant Asset Write-Off Just Became Permanent
Eleven Years of Guessing
For eleven years, working out whether the instant asset write-off would still exist by the time you needed it was practically a hobby for small business owners. Extended here. Tweaked there. Left to expire and reinstated at the last minute more than once. That guessing game is over, and it’s worth actually understanding what replaced it rather than assuming it’s just more of the same.
Threshold per asset
permanent from 1 July 2026
Aggregated annual turnover
to be eligible
Not per year
claim each eligible asset in full
What Actually Changed
From 1 July 2026, the $20,000 instant asset write-off is permanently legislated, the number itself, $20,000, isn’t new, what’s new is that it no longer needs a fresh Budget announcement to keep existing. Eligible small businesses, generally those with aggregated turnover under $10 million, can immediately deduct the full cost of an eligible asset costing less than $20,000, in the year it’s first used or installed ready for use, rather than depreciating it over several years.
Per Asset, Not Per Purchase
One of the most common misunderstandings I come across is treating the $20,000 as a total cap across the year. It isn’t. The threshold applies per individual asset, which means a business could buy several eligible assets under $20,000 each within the same financial year and claim each one in full, provided every asset genuinely meets the criteria on its own.
A ute, a set of tools, and a new laptop are three separate decisions, not one shared limit. Each one is assessed individually against the $20,000 threshold and the eligibility criteria. If all three qualify, all three are claimable in full in the same year.
What Qualifies
Eligible assets generally need to be used in earning your business income, and priced under the $20,000 threshold on a GST-exclusive basis if you’re registered for GST. For a lot of tradies and small business owners, this covers exactly the kind of purchases already on the list: power tools, compressors, trailers, scaffolding, and vehicles priced under the threshold.
Whether new or second-hand equipment qualifies can depend on the specific scheme and your business structure, which is exactly the kind of detail worth checking against your actual purchase with our accounting and tax team rather than assuming either way.
Above the Threshold Isn’t a Lost Deduction
The other mistake I see constantly is treating anything over $20,000 as somehow not deductible at all. It is deductible, it just moves into depreciation instead of an immediate full claim, spread over the asset’s useful life. That’s a genuinely different outcome to losing the deduction, and conflating the two leads to some odd purchase decisions, like avoiding a needed $22,000 piece of equipment because someone assumed it wouldn’t be claimable at all.
Immediate full deduction vs depreciation over several years is a timing difference, not a yes-or-no on whether it’s deductible. The purchase still reduces your taxable income either way. The question is when.
Why Permanent Actually Changes the Decision
The old system rewarded rushing. Buy it before 30 June or risk missing the window, was the unspoken rule for over a decade. Permanence removes that pressure, which makes a noticable difference to how purchases actually get planned.
If you’ve been putting off a proper look at your business’s purchasing and cash flow planning because the rules kept shifting under you, this is a reasonable moment to actually do it, and it’s the kind of planning conversation that fits naturally into business coaching rather than a rushed phone call in June.
Where Bookkeeping Actually Matters Here
None of this works cleanly without the paperwork behind it lining up. Which asset, which date it was first used or ready for use, whether it was GST-exclusive under the threshold, and how it’s been recorded, all of that needs to be accurate for the claim to hold up.
This is one of the quieter reasons good bookkeeping earns its cost. A business running clean records on something like Xero can produce that detail in minutes. A business reconstructing it from memory at tax time generally can’t, and that gap shows up as a missed or a challenged deduction.
If You’re Planning Several Purchases This Year
Permanence is genuinely useful here, because it means a purchase plan spread sensibly across the financial year is now a reasonable strategy, rather than a gamble on the rule still existing when you get around to it. If you’re weighing up several purchases, it’s worth a proper conversation about timing them against your cash flow rather than your usual instinct, which for most trade businesses is to buy everything in the same rushed fortnight before the financial year ends out of old habit.
Planning equipment purchases this year?
Know exactly where you stand before you buy. We’ll walk through your specific situation properly, not a general answer.
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Frequently Asked Questions
The instant asset write-off allows eligible small businesses to immediately deduct the full cost of an eligible asset costing less than $20,000 in the financial year it is first used or installed ready for use, rather than depreciating it over several years. The business must have aggregated annual turnover under $10 million to qualify.
Yes. From 1 July 2026, the $20,000 instant asset write-off is permanently legislated. It no longer requires a fresh Budget announcement each year to remain in effect. This removes the old uncertainty that led many business owners to rush purchases before the end of the financial year.
Eligible assets generally need to be used in earning your business income and priced under the $20,000 threshold on a GST-exclusive basis if you are registered for GST. Common examples for tradies and small business owners include power tools, compressors, trailers, scaffolding, and vehicles priced under the threshold. Whether second-hand equipment qualifies depends on the specific scheme and your business structure — check with your accountant before assuming either way.
Per asset, not per year. A business could buy several eligible assets under $20,000 each within the same financial year and claim each one in full, provided every asset genuinely meets the eligibility criteria on its own. A ute, a set of tools, and a laptop are three separate decisions, not one shared annual limit.