$20,000 Instant Asset Write-Off Explained

25/05/2026

$20,000 Instant Asset Write-Off Explained

What Small Businesses Need to Know.

Upgrade Your Business Equipment and Potentially Reduce Tax 

Before EOFY 30 June 2026.

The $20,000 Instant Asset Write-Off remains available for eligible Australian small businesses until 30 June 2026, giving business owners an opportunity to immediately deduct the cost of eligible business assets rather than depreciating them over several years.

For many small businesses, this can provide valuable cash flow relief while allowing businesses to invest in equipment, technology, tools, vehicles and office upgrades.

At Cashflow Financial, we are already helping clients across Sutherland, Wollongong, Greater Sydney and NSW plan ahead before the 30 June 2026 deadline.

What Is the Instant Asset Write-Off?

The Instant Asset Write-Off allows eligible businesses to claim an immediate tax deduction for the business portion of eligible assets costing less than $20,000 each.

Instead of claiming depreciation over several years, the deduction can generally be claimed upfront in the financial year the asset is first used or installed ready for use.

This can improve:

  • Cash flow
  • Tax planning flexibility
  • Business investment timing
  • End-of-financial-year tax outcomes

Who Is Eligible?

The current rules generally apply to businesses that:

  • Have an aggregated turnover of less than $10 million
  • Use the simplified depreciation rules
  • Purchase eligible depreciating assets
  • First use or install the asset ready for use between 1 July 2025 and 30 June 2026

Important Instant Asset Write-Off Rules for 2025–26

The $20,000 Limit Applies Per Asset

One of the biggest advantages is that the threshold applies per individual asset, not per business.

That means a business may be able to purchase multiple eligible assets under $20,000 and potentially claim each one immediately.

Example

A landscaping business purchases:

  • Trailer — $8,000
  • Ride-on mower — $14,000
  • Laptop and office equipment — $5,500

Because each asset is under $20,000, the business may potentially claim all three assets immediately if eligibility requirements are met.

The Asset Must Be Ready for Use Before 30 June 2026

This is one of the most misunderstood rules. Simply ordering or paying for an asset before 30 June 2026 is not enough. The asset must be:

  • Installed
  • Operational
  • Ready for business use

before 30 June 2026.

Example

If a business orders a new machine on 25 June 2026 but delivery and installation occur in July 2026, the deduction may not be available for the 2025–26 financial year.

Can You Claim Vehicles?

Potentially yes, but there is an important catch.

To qualify for the instant write-off, the cost of the vehicle itself generally needs to be under the $20,000 threshold.

Many business vehicles exceed this amount, meaning they may instead need to be depreciated through the small business depreciation pool.

Example

  • Business ute costing $18,500, may qualify
  • Vehicle costing $45,000 does not qualify for the instant write-off and may instead be depreciated over time

Can You Claim Second-Hand Assets?

Yes.

Eligible second-hand assets may also qualify under the current rules.

This can benefit businesses purchasing:

  • Used equipment
  • Second-hand machinery
  • Refurbished office equipment
  • Pre-owned work vehicles under the threshold

What Types of Assets Could Potentially Qualify?

Examples may include:

  • Laptops and computers
  • Office furniture
  • Tools and equipment
  • Business machinery
  • Work vehicles under the threshold
  • POS systems
  • Cameras and technology
  • Air conditioning systems
  • Business trailers
  • Trade equipment

Eligibility depends on the specific asset and business circumstances.

What Happens After 30 June 2026?

Under the current law, the $20,000 threshold is legislated through to 30 June 2026.

Recent Federal Budget announcements have proposed making the $20,000 instant asset write-off permanent for small businesses; however legislation and final implementation details are still evolving.

This means businesses should not assume the rules will remain unchanged after 30 June 2026.

Key EOFY Planning Considerations

Before making purchases, businesses should consider:

  • Cash flow impact
  • Finance arrangements
  • Business-use percentages
  • GST implications
  • Timing of delivery and installation
  • Whether the purchase genuinely benefits the business
  • Interaction with depreciation pooling rules

Good tax planning is about more than simply reducing tax, it is about making commercially sensible decisions.

Frequently Asked Questions

Is the $20,000 threshold including or excluding GST?

For GST-registered businesses, the threshold generally applies excluding GST. Non-GST registered businesses generally use the GST-inclusive amount.

Can sole traders use the instant asset write-off?

Potentially yes, provided eligibility requirements are met. Sole traders, companies, trusts and partnerships may all potentially qualify.

Can I claim more than one asset?

Yes. The threshold applies per asset, meaning multiple eligible assets may potentially be claimed.

What if the asset costs more than $20,000?

Assets at or above the threshold generally cannot be immediately written off and may instead need to be depreciated over time.

How Cashflow Financial Can Help

The Instant Asset Write-Off can create valuable tax planning opportunities, but the rules around eligibility, business use, depreciation pools and timing can become complex.

At Cashflow Financial,, we help businesses across Wollongong, the Sutherland Shire and Greater Sydney. If you are considering purchasing business equipment, vehicles or technology, now is the time to contact us before the EOFY 30 June deadline.