Have you been wondering how the Federal Government’s instant asset write-off may benefit your business?
As part of the 2026 Federal Budget, the $20,000 instant asset write-off is set to become a permanent tax scheme for small business owners to access.
Here's a quick rundown on the instant asset write-off and whether it’s something you should take advantage of.
What is an instant asset write-off?
The instant asset write-off allows eligible small businesses to claim immediate deductions for new or second hand plant and equipment asset purchases such as vehicles, tools and office equipment. The assets must first be used, or installed for use, in the income year you’re claiming for.
Once the budget Federal Government’s budget commitment is passed as law, the threshold will be set at $20,000.
What type of purchases should I consider making?
Before making any large purchases, we suggest you speak to your accountant or tax professional and assess how the asset will benefit your business and how the purchase may impact on your cash flow or finances in the short term.
If you decide to take advantage of the instant asset write-off, you should make the decision based on the needs of your business. For example, if you need to purchase a vehicle for deliveries to expand your business operations to help you achieve your business goals, or because it is in line with your business plan.
What happens if I make a purchase that is greater than the write-off amount?
The instant asset write-off threshold applies to the total cost of the asset, not just its taxable portion. Any purchases equal to or more than the threshold can be put into your small business asset pool, where you will be able to claim gradual deductions (depreciation) each year.
How do I claim the instant asset write-off?
If you buy an asset that comes under the threshold, you can claim the business portion of the asset’s use in your tax return for that financial year.
You can claim a deduction for multiple assets as long as the cost of each individual asset is less than the relevant threshold.
The ATO website provides examples of how to work out your instant asset write-off.
TIP: If your business is structured as a partnership there’s no double dipping allowed. Under the instant asset write-off, purchases are considered as being owned by the partnership and not by individual partners. If a partner buys an asset such as a motor vehicle in their own name, the asset won’t be eligible for the write-off as part of the partnership, and if the partner does not qualify as a small business taxpayer personally, they will not be eligible for the write-off.
More information
For more information on the instant asset write-off visit the Australian Taxation Office website or speak to your accountant or a qualified tax professional.
If you’d like to speak to a business adviser to discuss your business plan or how your business can expand, contact our free advisory service.
