The Australian Government has announced a further extension of the $20,000 instant asset write-off, providing continued tax relief and investment support for eligible small businesses during the 2025–26 financial year.
This measure allows businesses to immediately deduct the business portion of eligible asset purchases, helping improve cash flow and encourage reinvestment into operations.
What Is the Instant Asset Write-Off?
The instant asset write-off allows eligible businesses to claim an immediate tax deduction for the business-use portion of assets costing less than $20,000, rather than depreciating them over several years. Assets must be first used or installed ready for use in the income year to qualify. Importantly, the threshold applies per asset, meaning multiple eligible purchases may be written off, provided each individual asset costs less than $20,000
Who May Be Eligible?
Based on current announcements and guidance:
- Businesses with aggregated turnover under $10 million using simplified depreciation rules may be eligible.
- The write-off applies to new and second-hand assets used for business purposes.
- Eligible assets must be purchased and installed ready for use by 30 June 2026 if the proposed extension is legislated.
Why This Matters for Small Business
The extension aims to provide small businesses with greater certainty and support investment in tools, equipment and technology. Immediate deductions can assist with:
- Improving short-term cash flow
- Upgrading essential business equipment
- Supporting productivity and growth
The measure has been widely welcomed as it offers “immediate tax relief” and helps businesses continue investing despite economic pressures.
Important Considerations
While the extension has been announced, it may be subject to legislation and final confirmation. Without an extension, the instant asset write-off threshold could revert to a significantly lower ongoing level, making timely tax planning essential.
Businesses should also note:
- Assets costing $20,000 or more are generally depreciated through the small business pool.
- The deduction applies only to the business-use portion of an asset.
- Good record-keeping and professional advice remain critical when claiming depreciation deductions.
How Roy A McDonald Pty Ltd Accountants Can Help
Understanding eligibility and maximising available tax incentives can be complex. At Roy A McDonald Pty Ltd Accountants, our team can help you:
- Determine whether your business qualifies
- Plan asset purchases strategically
- Ensure your claims comply with ATO requirements
- Optimise your tax outcomes for the 2025–26 financial year
If you’re considering investing in new equipment or technology, speak with our team today to make informed, tax-effective decisions.
