Every year around March, the same conversation starts happening in workshops, warehouses and site offices across Australia. Someone has a quote for a new machine sitting on the desk, the accountant has mentioned the write-off, and nobody is quite sure what the threshold is this time. The rules have moved so often over the past six years that even business owners who have claimed the deduction before are no longer confident about what applies to the current financial year.
Short answer: For the 2025-26 income year, businesses with an aggregated annual turnover of less than $10 million can immediately deduct the business portion of eligible assets costing less than $20,000, where the asset is first used or installed ready for use between 1 July 2025 and 30 June 2026. This figure is published by the ATO at ato.gov.au. Thresholds are set year by year, so confirm the current figure with the ATO or your accountant before you commit to a purchase.
What is the instant asset write-off threshold for 2025-26?
The threshold is $20,000 per eligible asset for businesses with aggregated annual turnover under $10 million. The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026. This is the figure published on ato.gov.au, and it applies per asset rather than as a total spending cap.
That last point matters more than most people realise. If you buy three separate items at $18,000 each, each one can be assessed against the threshold on its own. There is no combined limit that stops you claiming all three, provided each asset genuinely qualifies and each one is used or installed ready for use inside the window.
Because thresholds have been legislated on a year-by-year basis since the end of temporary full expensing, the figure that applied last year is not automatically the figure that applies next year. Treat $20,000 as correct for 2025-26 and check ato.gov.au again before planning a purchase for 2026-27.
Who qualifies for the write-off this financial year?
Eligibility rests on aggregated annual turnover of less than $10 million, calculated across your business and any connected or affiliated entities. You also need to be carrying on a business and using the simplified depreciation rules. Sole traders, partnerships, companies and trusts can all qualify if they meet the turnover and use tests.
Aggregation catches people out. If you operate through several entities, or you have connected entities under common control, their turnover counts towards the same $10 million test. A group that looks small on any single ABN can sit above the line once the entities are added together. Your accountant will work this out properly, and it is worth asking the question before you sign a purchase order rather than after.
Does the $20,000 limit include GST or not?
It depends on your GST position. If your business is registered for GST, the threshold is applied on a GST-exclusive basis, because you claim the GST back as an input tax credit. If you are not registered for GST, the threshold is applied on a GST-inclusive basis, since the GST forms part of your actual cost.
Practically, a GST-registered business can buy an asset priced at $21,999 including GST, because the GST-exclusive cost of $19,999 sits under the limit. A business that is not registered would be over the threshold on the same purchase. It is a small distinction that changes the answer entirely, so work out which basis applies to you before comparing quotes.
What happens to assets that cost $20,000 or more?
Assets at or above the threshold are not lost. Under the small business simplified depreciation rules they generally go into the small business pool and are depreciated over time rather than deducted in full in year one. The deduction still comes, just spread across several years instead of arriving all at once.
| Cost of asset (business portion) | General treatment for an eligible small business in 2025-26 |
|---|---|
| Under $20,000 | May be immediately deducted in the income year the asset is first used or installed ready for use |
| $20,000 or more | Generally allocated to the small business simplified depreciation pool and depreciated at 15% in the first year, then 30% each following year |
| Improvement to an existing asset | The cost of the improvement is assessed against the same $20,000 threshold in its own right |
| Pool balance below $20,000 at year end | The remaining pool balance may be written off in that year |
Indicative only and based on ATO guidance for the 2025-26 income year. Depreciation outcomes depend on your entity, elections and circumstances. Confirm with your accountant and check ato.gov.au before relying on any of it.
A separate car limit applies to passenger vehicles and is indexed annually, which caps the amount you can claim regardless of what you paid. If a vehicle purchase is on your list, check the current car limit figure on the ATO website rather than assuming.
Can you claim the write-off on an asset you financed?
In most cases, yes. The deduction generally attaches to ownership and use of the asset, not to how you paid for it. A chattel mortgage, for example, typically leaves you as the owner from day one, so the asset can be assessed against the threshold even though the loan is still being repaid.
The structure of the finance does change the tax treatment of the repayments themselves, and different products behave differently. A chattel mortgage, a hire purchase and an operating lease are not interchangeable from a tax point of view. That is a conversation for your accountant, and it is worth having before the paperwork is signed rather than at tax time.
The commercial appeal is straightforward. Financing lets you preserve working capital while still bringing the deduction forward into the current year, assuming the asset qualifies. Our guide to how the instant asset write-off works in general covers the underlying mechanics in more detail, and our business loan options page sets out the products commonly used to fund equipment purchases.
What dates actually matter before 30 June?
The test is not the date you paid or the date you ordered. The asset must be first used, or installed ready for use, by 30 June 2026. An asset that arrives in July, or sits in a crate uninstalled on 30 June, generally falls into the following income year even if the invoice is dated in June.
- Order early enough that delivery, installation and commissioning can all be completed before 30 June.
- Keep the delivery docket, installation records and any commissioning sign-off, not just the tax invoice.
- Confirm finance approval well ahead of the supplier’s cut-off, since settlement delays can push delivery into July.
- Check whether the asset is one of the excluded categories before you assume it qualifies.
What changed compared with recent years?
The most significant shift happened when temporary full expensing ended. That measure allowed many businesses to fully expense eligible assets with no cost cap. Since then the deduction has returned to a capped, year-by-year threshold, which means planning has to be done fresh each financial year rather than assumed.
The practical consequence is that large equipment purchases no longer receive an immediate full deduction under this measure. A $180,000 excavator now goes into the pool and depreciates over time. That does not make the purchase a bad decision, but it does change the cash flow modelling, and it is a common source of surprise for businesses that last bought major plant during the full expensing period.
Frequently asked questions
Is the $20,000 threshold per asset or per business?
Per asset. Multiple qualifying assets can each be assessed against the $20,000 limit separately, provided each one is eligible and each is first used or installed ready for use within the income year.
Does a second-hand asset qualify for the instant asset write-off?
Second-hand assets can qualify under the current rules, provided they meet the cost threshold and the other eligibility conditions. Confirm the position for your specific asset with your accountant or on ato.gov.au.
What if my turnover is over $10 million?
Businesses above the $10 million aggregated turnover test cannot use this measure for the 2025-26 year. Other depreciation rules will apply instead, and your accountant can advise which ones fit your structure.
Will the same threshold apply in 2026-27?
Not necessarily. The threshold has been legislated year by year, so a future income year could differ. Always confirm the current figure on ato.gov.au before planning a purchase around it.
Can I claim the deduction if the asset is used partly for private purposes?
Only the business portion of the cost can be deducted. If an asset is used 70% for business, the deduction is limited to 70% of the eligible cost, and records supporting that split should be kept.
If the timing of an equipment purchase is the thing holding you up, it usually pays to sort the funding before the end-of-financial-year rush. TYG Finance works with more than 80 lenders and can tell you quickly what is realistic for your business. Call 1300 894 894 or get in touch with the team to talk it through. Nothing above is tax or financial advice, and your accountant should confirm how the rules apply to your circumstances.