What is actually legislated for 2025-26
For the income year ending 30 June 2026, the instant asset write-off threshold is $20,000 per asset, for small business entities with aggregated turnover under $10 million. This is current law, not a proposal — it was legislated through Schedule 4 of the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025, which amends the Income Tax (Transitional Provisions) Act 1997, after the extension bill passed the Senate and received Royal Assent in March 2025 — well ahead of the 1 July 2025 start of the income year it covers.
The mechanics: an eligible depreciating asset that costs less than $20,000 and is first used, or installed ready for use, for a taxable purpose between 1 July 2025 and 30 June 2026 can be written off in full in the year it is first used or installed — not the year it was purchased or invoiced, which is the detail that catches people who buy in June and don't plug the asset in until the new financial year.
The $20,000 figure is exclusive of GST for a business registered for GST, and inclusive of GST for one that is not. That distinction matters at the margin — an asset priced at $19,800 plus GST is a $21,780 asset for a business that can't claim input tax credits, which pushes it above the threshold into the general small business pool instead of an instant deduction.
What is proposed for 2026-27 — and what is not yet true
On 12 May 2026, the Government announced in the 2026-27 Budget that it intends to make the $20,000 instant asset write-off threshold permanent from 1 July 2026, removing the annual re-extension cycle the measure has run on since 2023. The enabling bill, the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, was introduced and referred to the Senate Economics Legislation Committee, which was due to report by 13 August 2026.
That is an announcement and a bill in committee, not a change to the law. Until the bill receives Royal Assent, the technical default position for assets first used or installed from 1 July 2026 reverts to the much lower threshold set out in the general law — the pattern that has repeated at nearly every year-end since the write-off was first raised above its original, permanent $1,000 level. Treat any figure quoted for 2026-27 as announced-but-not-law until it is confirmed against the current text of the ATO's instant asset write-off page and the Bill's passage on the Federal Register of Legislation, and date whatever you find when you check it — this is exactly the kind of number that is correct on the day it is written and wrong a few months later.
This is not a new pattern for this measure. The write-off has been extended, expanded, contracted and re-extended by separate amending Acts almost every year since 2015 — each extension a discrete bill with its own income-year window, not a standing rule. A business that assumes "the threshold" is a fixed number is planning against last year's law.
Who qualifies, and how it applies per asset
Eligibility runs on aggregated turnover, not the entity's own turnover alone — it adds the turnover of the business and any entities connected with or affiliated to it. A business under the $10 million aggregated turnover threshold that has opted into the simplified depreciation rules can use the instant asset write-off; a business that exceeds it, or that has opted out of simplified depreciation, applies the general depreciation rules instead, which spread the deduction over the asset's effective life.
The write-off applies per asset, not as a single pool limit. A business can instantly deduct as many separate assets as it buys in the year, provided each one individually costs less than the threshold — five laptops at $1,800 each and a $19,000 delivery van are each written off in full, but one $22,000 piece of equipment is not, regardless of how far under the total the rest of the year's purchases sit.
A car is subject to the car limit in addition to the write-off threshold — the deductible cost of a passenger vehicle designed to carry fewer than nine passengers is capped at the car limit for the relevant income year regardless of the asset's actual purchase price, and only the business-use portion of that capped amount is deductible in either case.
Above the threshold: the general small business pool
An asset that costs $20,000 or more does not lose the deduction — it goes into the general small business pool instead of being written off immediately. Pooled assets depreciate at 15% in the year they are allocated to the pool, then 30% of the diminishing balance in each year after that, regardless of the asset's actual effective life.
The pool itself has its own write-off mechanic: if the pool's closing balance for the year, after all additions and disposals, falls below the instant asset write-off threshold, the entire remaining pool balance can be written off in that year. That is a separate test from the per-asset threshold and is worth checking every year-end rather than assumed, because a pool that sat above the threshold in one year can drop below it in the next simply through normal depreciation.
Assets used partly for private purposes are apportioned before either test applies — only the business-use percentage of the cost is what gets compared to the threshold and depreciated, whether the asset lands as an instant write-off or in the pool.
The asset register that keeps the claim clean
The claim itself rests on a small business entity electing into the simplified depreciation rules and keeping records that show, for every asset: the date it was first used or installed ready for use (not the purchase or invoice date), the cost including any GST treatment, the business-use percentage where the asset is not used wholly for business purposes, and which side of the threshold it landed on. Deduction entitlements depend on substantiating the claim, and the ATO can and does request the records behind a claimed instant write-off.
The asset register is where that gets built, and it earns its keep at year-end rather than at tax time. Each addition logged with its in-service date the week it happens — not reconstructed from a stack of supplier invoices in July — means the $20,000 test is applied against the correct date the first time, instead of being guessed at and corrected later. A vehicle or piece of equipment bought in June but not put into service until July belongs in the following year's test, and a register that only tracks purchase date will get that wrong.
The same register carries the pooled assets forward — their written-down value, the year they were added, and the running pool balance — so the year-end pool write-off test is a lookup instead of a reconstruction. That is the specific, mechanical work an asset register earns: dated entries, the cost split by GST treatment, and the business-use percentage recorded once at the point of purchase rather than argued about later.
None of this is a filing position. Whether a specific asset is eligible, how a borderline case should be treated, and the return itself are calls for your registered BAS or tax agent — everything above is prepared for them to review and lodge, with the dates and figures already tied out.
Sources
- ATO — Instant asset write-off for eligible businesses
- ATO — $20,000 instant asset write-off for 2025-26
- ATO — $20,000 Instant Asset Write-off (new legislation, in detail)
- Federal Register of Legislation — Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025 (Schedule 4: $20,000 instant asset write-off for small business entities)
- Parliament of Australia — Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 (Senate Economics Legislation Committee inquiry)
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