The $20,000 instant asset write-off is now permanent from 1 July 2026. For eligible small businesses, that means an immediate deduction can be available for the business portion of each eligible asset costing less than $20,000 when it is first used or installed ready for use.
It's useful. It isn't a reason to buy things you don't need. My strong view: a tax deduction should never be the main reason for an equipment purchase. The right question is whether the asset will earn, protect or save the business time. If it does, the permanent write-off makes the timing and record-keeping easier to plan.
The rule applies to businesses with aggregated turnover under $10 million, subject to the relevant eligibility requirements. That turnover test is broader than the sales figure of one entity, so check it before treating the rule as automatic.
What the permanent $20,000 instant asset write-off does
Instead of depreciating an eligible asset over several years, an eligible business can claim the business-use portion of its cost straight away in the income year it is first used or installed ready for use. The threshold is less than $20,000. That wording matters. An asset at $20,000 doesn't meet a rule requiring the cost to be less than the threshold.
The measure applies asset by asset. Buying several qualifying items doesn't prevent the write-off merely because their combined cost is higher. The test is applied to each asset, not to the total shopping trolley. The business.gov.au guidance also says the write-off can apply to both new and second-hand assets where the conditions are met.
There are still boundaries. An immediate deduction is not a discount from the supplier, and it doesn't reimburse the purchase. It's a tax deduction calculated through the business return. The cash needs to make commercial sense before tax is considered.
Check the aggregated turnover test before you buy
The rule is intended for small businesses with aggregated turnover under $10 million. Aggregated turnover is not always the same as the revenue shown in one set of accounts. It can include the annual turnover of the business and entities that are connected with it or are affiliates.
If you operate several entities, have a family group, or share control with another business, do not guess. Map the group first. A business that looks small in isolation may not qualify once the relevant related entities are considered. The reverse can also happen, but it needs a proper review.
- Start with the entity buying the asset. Confirm it is carrying on a business and will use the asset in that business.
- List related entities and affiliates. Include companies, trusts, partnerships and other businesses that may need to be counted.
- Use a current turnover forecast. A fast-growing business should not rely only on last year's number.
- Keep the working papers. A short eligibility note in the tax file is sensible, especially for a group with more than one entity.
This check belongs before the purchase order. If you do it after delivery, your choices may be limited.
Less than $20,000 means per asset
Keep the language literal. Each individual asset must cost less than $20,000. Do not assume several items become one asset because they were bought from the same supplier on the same day. Equally, don't artificially split one integrated asset into parts just to force it below the threshold.
Use the invoice, asset description and how the items work in the business to reach a sensible view. A separate monitor, laptop and desk may be distinct assets where they have separate functions. A single machine supplied with necessary components may be one asset. If the answer is not obvious, get advice before coding the purchase.
For assets used partly outside the business, only the business-use portion is deductible. Private use doesn't disappear because the business card paid for it. Set a reasonable use percentage, document why it is reasonable and revisit it if the use changes.
Timing: first used or installed ready for use
Ordering and paying are not the only dates that matter. The asset needs to be first used or installed ready for use in the relevant income year. A piece of equipment paid for before year end but sitting boxed in a storeroom might not produce the result you expected. Installation, delivery delays and commissioning matter.
Build this into the purchase plan. Ask the supplier for the expected delivery and installation date. For technology, allow time for configuration and handover. For a vehicle or specialised equipment, keep the documents that show when it became available for business use.
Don't force a rushed purchase in late June just to chase a deduction. A bad buying decision lasts longer than a tax year. The permanent rule removes much of that artificial deadline pressure. If the asset is right for the business, buy it when the business is ready to use it properly.
What happens at or above the threshold
An asset costing $20,000 or more is not eligible for the immediate write-off under this threshold. It may still be deductible over time through the general depreciation rules or other available small-business depreciation rules, depending on the facts. It isn't simply lost.
That means the decision isn't a cliff between a good purchase and a bad one. It is a cashflow and timing question. A larger asset may have a stronger business case, even though its deduction comes through more slowly. Compare the operating benefit, financing impact, expected useful life and tax timing together.
Also separate repairs from capital assets. A repair that restores an existing asset may have different treatment from a replacement or improvement that creates a new asset. The invoice wording is helpful, but the underlying work is what matters.
A practical buy-and-record workflow
- Write the business purpose. One plain-English sentence is enough: what problem will this asset solve and who will use it?
- Confirm turnover eligibility. Check the group position before committing.
- Check the cost per asset. Record whether it is below the $20,000 threshold and how you decided what counts as one asset.
- Save the invoice and payment evidence. Keep the supplier invoice, finance papers if relevant and bank record together.
- Record first use or installation. Note the date it was ready for business use. Delivery proof, installation paperwork or a commissioning email can support this.
- Set the business-use percentage. Keep a short explanation where there is private use.
- Enter it in the asset register. Mark the tax treatment and retain the record even if the full deduction is claimed immediately.
This is a simple process. Consistency is what makes it work. A well-kept asset register protects you if the invoice is questioned years later and gives you a useful record if the asset is sold, traded in or starts being used privately.
What to do now
Review your planned equipment and technology purchases for the next quarter. Don't create a wish list because the rule exists. Choose the purchases that already solve a real business need. Then check turnover, cost per asset, expected installation date and records before you commit.
The permanent $20,000 instant asset write-off is most valuable when it supports a planned investment, not a panic spend. Good businesses buy useful assets. Good records make the deduction easier to claim.
Sources and references
Frequently asked questions
When does the permanent $20,000 instant asset write-off start?
The permanent measure applies from 1 July 2026 for eligible small businesses.
Who can use the $20,000 instant asset write-off?
The approved measure is for small businesses with aggregated turnover under $10 million, subject to the applicable requirements.
Is the $20,000 threshold per asset?
Yes. The threshold is applied to each individual eligible asset, rather than to the total cost of several separate assets.
Does an asset costing exactly $20,000 qualify?
No. The rule is for an asset costing less than $20,000.
When must an asset be ready to use?
The asset must be first used or installed ready for use in the relevant income year.
Can I claim private use of a business asset?
No. Only the business-use portion of an eligible asset cost is deductible.
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