Instant Asset Write-Off 2026–27: The $20,000 Limit Is Now Permanent – What Your Small Business Can Claim
The instant asset write-off limit for 2026–27 is $20,000 per asset, and it is now permanent law from 1 July 2026. Small businesses with aggregated turnover under $10 million can immediately deduct the business-use portion of each eligible asset costing less than $20,000 (GST-exclusive if you're registered for GST), provided it is first used or installed ready for use between 1 July 2026 and 30 June 2027.
- Limit
- Under $20,000 per asset – no cap on the number of assets
- Who qualifies
- Aggregated turnover under $10 million, using simplified depreciation
- Status
- Permanent – Treasury Laws Amendment (Tax Reform No. 2) Act 2026
- Deadline this year
- First used or installed ready for use by 30 June 2027
- New & second-hand
- Both qualify
- $20,000 or more?
- Small business pool: 15% in year one, 30% after
Reviewed by Saqib Chuhdhary, CPA and Xero Certified Advisor · Updated October 2026 · Sources: ATO, Treasury
Key Takeaways for 2026–27
The rules haven't changed much in dollar terms. What changed is certainty: you no longer have to wait for a last-minute Budget extension to plan equipment purchases.
It's law, not a promise
The ATO confirms the permanent $20,000 threshold is now law. Some guides still say "not yet legislated" – that's out of date.
The test is per asset
Buy five $15,000 assets and you can write off all five. One $21,000 asset can't be written off at all – it goes to the pool.
Timing beats purchase date
What counts is when the asset is first used or installed ready for use, not when you paid the invoice.
GST matters
If you're GST-registered and claim the full credit, the $20,000 test is GST-exclusive – so assets up to about $21,999 GST-inclusive can qualify.
A deduction isn't free money
A $10,000 write-off saves a company at 25% only $2,500 in tax. Buy because the business needs the asset.
Companies get a bonus
Loss carry back is also back permanently for companies – useful if big investment pushes you into a tax loss.
Is the Instant Asset Write-Off Still Going? Quick Answers
These are the questions business owners in Parramatta and across Sydney ask us most often. Each answer is written so you can act on it.
Is the instant asset write-off still going in 2026–27?
Yes. From 1 July 2026 the $20,000 instant asset write-off is permanent for small businesses with aggregated turnover under $10 million. There's no 30 June "cliff" any more, though each asset still needs to be used or installed by 30 June to be claimed in that year.
Is the $20,000 limit GST-inclusive or exclusive?
It depends on your GST registration. If you're registered and can claim the full GST credit, use the GST-exclusive price. If you're not registered for GST, the GST you paid is part of the cost, so the GST-inclusive price must be under $20,000.
Can sole traders claim the instant asset write-off?
Yes. Sole traders, partnerships, trusts and companies can all claim if aggregated turnover is under $10 million and they use the simplified depreciation rules. Only the business-use percentage is deductible.
Can I write off a second-hand asset?
Yes. New and second-hand depreciating assets both qualify, as long as the cost is under $20,000 and the asset isn't one excluded from simplified depreciation (for example, assets used for R&D).
Can I claim a car or ute under the instant asset write-off?
Only if it costs less than $20,000. Most new cars and utes cost more, so they go into the small business pool instead. Passenger cars are also subject to the car limit, which is $69,883 for 2026–27.
What if I bought the asset in June but install it in July?
You claim it in the year it's first used or installed ready for use. Equipment that arrives on 28 June 2027 but isn't installed until 5 July 2027 is a 2027–28 deduction.
What Can You Claim Under the $20,000 Instant Asset Write-Off?
Use this as a first check before you buy. If an item is borderline, talk to your accountant before the invoice is paid, not after.
| Asset | Typical cost (ex GST) | Instant write-off? | What happens |
|---|---|---|---|
| Laptops, computers, monitors | $1,500 – $6,000 | Yes | Deduct business-use portion in full |
| Commercial coffee machine, café or kitchen fit-out items | $8,000 – $18,000 | Yes | Deduct in full once installed ready for use |
| Tradie tools, welders, generators, trailers | $500 – $15,000 | Yes | Each item tested separately |
| Office furniture, shelving, POS hardware | $300 – $10,000 | Yes | Deduct in full |
| Second-hand ute or van | $15,000 – $19,900 | Yes, if under $20k | Business-use % deductible; logbook needed |
| New ute, van or car | $35,000 + | No | Small business pool (15% then 30%); car limit may apply |
| Machinery, excavator, major fit-out | $20,000 + | No | Small business pool |
| Upgrade to an asset you already wrote off | Under $20,000 | Usually | First cost addition after the write-off year can be deducted |
| Software subscriptions, repairs, consumables | Any | Not needed | Usually deductible as ordinary expenses anyway |
Instant Asset Write-Off Examples: How Much Tax Do You Actually Save?
Your tax saving is the deduction multiplied by your tax rate. The examples below use the 25% base rate entity company rate and the 30% individual rate plus 2% Medicare levy.
Parramatta café: $14,500 coffee machine
A GST-registered café company buys a machine for $15,950 including GST and has it installed on 10 March 2027.
- Cost for the test: $14,500 ex GST – under $20,000
- Deduction in 2026–27: $14,500
- Tax saving at 25%: $3,625
- Plus $1,450 GST credit on the BAS
Sole trader consultant: laptop and printer
A Sydney sole trader buys a $6,000 laptop (80% business use) and a $700 printer (100% business use).
- Laptop deduction: 80% × $6,000 = $4,800
- Printer deduction: $700
- Total: $5,500 × 32% = $1,760 less tax
Electrician: $42,000 ute, 70% business use
The ute costs more than $20,000, so the instant write-off doesn't apply – even though the business portion is $29,400.
- Pool amount: 70% × $42,000 = $29,400
- Year 1 deduction at 15%: $4,410
- Year 2 onwards: 30% of the remaining pool balance
$20,000 is the full cost, not the business portion
A $24,000 asset used 50% for business has a $12,000 business portion – but it still fails the test because the full cost is $24,000.
- Trade-ins: use the price before the trade-in credit
- Private use reduces the deduction, not the cost test
Accountant's view: spending $14,500 to save $3,625 still leaves you $10,875 out of pocket. The write-off improves the timing of a deduction you'd mostly get anyway through depreciation. It's a cash-flow tool, not a reason to buy. If you need the asset, it's worth checking whether asset finance or cash makes more sense for your forecast.
How to Claim the Instant Asset Write-Off in 5 Steps
The claim goes in your tax return. The work that protects it happens when you buy.
Check turnover
Confirm aggregated turnover (including connected entities and affiliates) is under $10 million.
Test the cost
Is each asset under $20,000? Ex GST if you claim the full credit; before any trade-in.
Install before 30 June
Make sure it's first used or installed ready for use by 30 June 2027.
Work out business use
Deduct only the business-use portion. Keep a logbook for vehicles.
Claim in your return
Report it in the business and professional items schedule or company return.
6 Instant Asset Write-Off Mistakes We See Every June
| Mistake | Why it costs you | Fix |
|---|---|---|
| Paying on 29 June, delivery in July | Deduction moves to next year | Order early; get installation confirmed in writing |
| Using the GST-inclusive price when GST-registered | You may wrongly think a $21,500 asset doesn't qualify | Test against the ex GST cost |
| Writing off a $35,000 car | Claim will be disallowed | Put it in the small business pool |
| Claiming 100% on a mixed-use asset | Overclaim, penalties and interest if reviewed | Apportion business use and keep evidence |
| Splitting one asset across invoices | The test is the cost of the asset, not the invoice | Treat one functional asset as one asset |
| Ignoring the turnover test for groups | Connected entities can push you over $10 million | Have your accountant check aggregated turnover |
Assets Over $20,000 and the New Loss Carry Back Rules
The small business pool
Assets costing $20,000 or more go into the small business simplified depreciation pool. They are depreciated at 15% in the first year and 30% each year after. If your pool balance is under $20,000 at the end of the income year, you can write off the whole balance. The rule that locks you out of simplified depreciation for five years after opting out remains suspended until 30 June 2027.
Loss carry back is back – permanently – for companies
The same Budget package brought back loss carry back for companies that aren't significant global entities. A company can carry a revenue loss back against tax it paid in either or both of the previous two years and receive a refundable tax offset. The refund can't exceed the company's franking account balance at the end of the loss year, so paying out franked dividends reduces the benefit. If a large equipment investment or a tough year pushes your company into a loss, this can turn a future deduction into cash now.
Both measures reward planning before 30 June. That's where a proactive tax accountant in Sydney or a virtual CFO pays for themselves: we model the purchase, the cash flow and the tax outcome before you sign.
Pre-30 June 2027 Asset Purchase Checklist
- Aggregated turnover confirmed under $10 million
- Each asset priced under $20,000 (ex GST if registered)
- Delivery and installation booked before 30 June 2027
- Tax invoice in the business's name, not yours personally
- Business-use % estimated and documented
- Vehicle logbook started (12 continuous weeks)
- Cash flow forecast checked – cash vs finance
- Grant or rebate eligibility checked before buying
Tip: some equipment purchases can also be co-funded. Check our government grants guide before you buy, as many grants won't fund costs you've already incurred.
Instant Asset Write-Off FAQs
What is the instant asset write-off for 2026–27?
It lets small businesses with aggregated turnover under $10 million immediately deduct the business portion of each eligible depreciating asset that costs less than $20,000, instead of depreciating it over several years. For 2026–27, the asset must be first used or installed ready for use between 1 July 2026 and 30 June 2027.
Is the $20,000 instant asset write-off permanent?
Yes. The Government announced in the 2026–27 Budget that the $20,000 threshold would be permanent from 1 July 2026, and the ATO confirms the measure is now law.
Is the instant asset write-off $20,000 per asset or in total?
Per asset. There's no cap on how many assets you can write off, as long as each one costs less than $20,000.
Can I use the instant asset write-off for a car in 2026–27?
Only if the car's cost is under $20,000. Cars costing more go into the small business pool. For passenger vehicles the car limit for 2026–27 is $69,883, and the maximum GST credit is $6,353.
Do I need to pay for the asset before 30 June?
The key date is when the asset is first used or installed ready for use. An asset paid for in June but installed in July is claimed in the following income year.
Can a company and a sole trader both claim?
Yes. Sole traders, partnerships, trusts and companies can all claim if they meet the turnover test and use simplified depreciation. Your tax saving depends on your tax rate.
What happens to assets that cost $20,000 or more?
They go into the small business pool and are depreciated at 15% in the first year and 30% each year after. If the pool balance falls below $20,000 at the end of a year, you can write off the remaining balance.
How much does it cost to get tax planning advice before EOFY?
At Saqch Partners, tax planning is included in our fixed monthly plans, which start from $299 a month plus GST. See our accounting plans and fees for what each plan includes.
- ATO – $20,000 instant asset write-off (updated 27 August 2026)
- ATO – Instant asset write-off for eligible businesses
- Budget 2026–27 – Tax reform
- ATO – Car thresholds for 2026–27
General information only. It doesn't take your circumstances into account. Speak with a registered tax agent before making purchase decisions.
Planning an Equipment Purchase Before 30 June 2027?
Saqch Partners helps small businesses in Parramatta, Sydney and across Australia time asset purchases, claim the instant asset write-off correctly and protect cash flow. Book a free consultation with our CPA team.
