Australian tax forms and banknotes with ‘tax time’ letters, representing small business tax deductions and instant asset write-off.

Finance

How to Make the Most of the $20,000 Instant Asset Write-Off Extension Until June 2026

Published on December 4, 2025

The Australian government has extended the $20,000 instant asset write-off for small businesses until 30 June 2026, providing what the Australian Taxation Office (ATO) calls “immediate” tax relief for more than four million small business owners. According to the government, this extension gives businesses the ability to immediately deduct the full cost of eligible assets under $20,000 rather than depreciating them over several years.

For small business owners dealing with rising costs, tight margins and increasing pressure to modernise, this tax break offers a timely opportunity to upgrade equipment, improve operations and strengthen cash flow.

This article breaks down exactly how the write-off works, who qualifies, what you can claim and how to strategically use it before it ends in June 2026.

$20,000 Instant Asset Write-Off: Key Rules for 2025–26

Small businesses with turnover under $10 million can instantly deduct eligible assets costing less than $20,000 until 30 June 2026. The write-off applies per asset, allowing multiple claims, and provides immediate tax relief by avoiding depreciation over time.

Understanding the Instant Asset Write-Off Extension

The instant asset write-off allows small businesses to immediately deduct the full cost of eligible business assets costing less than $20,000, instead of spreading deductions over years through depreciation.

The extension passed Parliament in late 2025 after originally being announced by the government earlier in the year. As per the Australian Government and the ATO, this measure is expected to support more than 4.1 million small businesses.

The rules remain largely unchanged, but the extension into the 2025–26 financial year gives businesses additional time to take advantage of the scheme.

Who Is Eligible?

The eligibility criteria are straightforward. A business qualifies if it:

Has annual turnover under $10 million
Purchases an eligible business asset costing less than $20,000
Puts the asset into use (or has it ready to use) for business purposes during the eligible period

This includes businesses across many industries, such as:

Trades and construction
Hospitality and cafés
Retail
Professional services
Online and home-based businesses

The measure applies on a per-asset basis, meaning businesses can purchase and instantly write off multiple assets as long as each individual item falls under the cost threshold.

What Small Businesses Can Claim

A wide variety of assets are eligible under the scheme. According to the ATO and guidance from the Assistant Minister for Productivity, examples include:

1. Tools and Equipment for Tradies

Power tools
Ladders
Compressors
Job-site equipment

2. Hospitality and Café Equipment

Coffee machines
Kitchen appliances
Refrigeration
Catering equipment

3. Technology and Office Items

Laptops
Desktop computers
Tablets
Printers
Networking equipment

4. General Business Purchases

Furniture
Point-of-sale systems
Security systems
Shelving and storage solutions

The key rule: the asset must be under $20,000 per item, exclusive of GST if your business is registered for GST.

Why the Extension Matters for Small Businesses

The extension gives business owners more time to plan asset purchases strategically.

1. Immediate Tax Relief

Depreciating assets over several years can strain cash flow. By allowing immediate deduction, businesses can see tax benefits right away.

2. Improved Cash Flow

For businesses managing tight budgets, being able to instantly deduct the asset cost means more predictable financial planning and faster return on investment.

3. Encourages Modernisation

Upgraded tools, equipment and digital systems can increase efficiency and productivity. Many businesses use the write-off to replace outdated or inefficient equipment.

4. Reduced Record-Keeping

Instead of tracking depreciation schedules, businesses can simply expense the asset in the year of purchase, reducing administrative workload.

According to the Australian Bureau of Statistics and government commentary, immediate deductions play a significant role in helping small businesses stay competitive.

Calls for Permanent or Higher Thresholds

While business groups have welcomed the extension, many argue it does not go far enough.

A permanent instant asset write-off
A threshold lifted to $150,000

Their reasoning is simple: the current threshold limits investment in meaningful upgrades such as vehicles, heavy machinery, digital systems and larger equipment.

Chartered Accountants Australia and New Zealand have also highlighted the recurring issue of uncertainty. Since 2015, the write-off has been adjusted or extended repeatedly, often late in the financial year, making planning difficult.

A permanent policy, according to these groups, would give business owners better confidence and reduce regulatory ambiguity.

How to Maximise the Write-Off Before June 2026

If your business is considering taking advantage of the write-off, here are strategic steps to ensure you get the most value:

1. Plan Purchases Early

Delaying until the final months can create supply delays or installation issues. Make sure assets are installed and ready for use before 30 June 2026.

2. Prioritise High-Impact Purchases

Identify assets that will meaningfully improve your operations, such as:

Equipment speeding up production
Technology improving efficiency
Machinery reducing labour costs
Appliances lowering energy use

3. Track Each Asset Separately

Because the write-off applies per asset, documenting itemised purchases ensures full eligibility.

4. Review GST and Financing Implications

If registered for GST, ensure your purchase invoices reflect the correct GST component, which may affect your net cost and eligibility.

5. Consult Your Accountant Early

This ensures:

Correct application of the instant write-off
Avoidance of ineligible purchases
Alignment with your broader tax strategy

6. Consider Bundling Purchases

While the $20,000 limit applies per asset, purchasing multiple items under the threshold can produce substantial cumulative deductions.

What Businesses Should Keep in Mind

Even with the extension, there are important rules and limitations:

Assets costing $20,000 or more must be placed into the small business depreciation pool.
Assets must be used primarily for business purposes.
Motor vehicles have separate rules regarding luxury car limits.
Second-hand assets can be eligible, provided they meet business-use and cost criteria.

Business owners should keep clear records of purchase dates, invoices and installation dates to support any future review by the ATO.

Conclusion

The extension of the $20,000 instant asset write-off until 30 June 2026 offers small businesses a valuable financial incentive at a time when operational costs and economic pressures remain high. Whether upgrading tools, investing in new technology or improving workplace operations, the write-off provides immediate tax benefits and the potential for long-term efficiency gains. While the business community continues to push for a permanent and higher threshold, the current measure still represents a significant opportunity for eligible businesses. Planning purchases strategically and staying compliant with ATO rules will help business owners maximise value before the deadline.

FAQ

1. Can I claim multiple assets under the $20,000 threshold?

Yes. The write-off applies per asset, allowing businesses to claim multiple items as long as each one costs less than $20,000.

2. Do second-hand assets qualify?

Generally, yes — provided the asset meets the cost and business-use requirements.

3. What happens after June 2026?

The government has not confirmed the next threshold. Many groups are calling for a permanent higher limit, but businesses should not rely on future extensions.