Ask most small business owners what the instant asset write-off threshold is right now and they will say $20,000. Ask what the law says and the answer, as at July 2026, is $1,000. The 2026-27 Federal Budget announced on 12 May 2026 that the $20,000 threshold will become permanent from 1 July 2026, ending a decade of year-by-year extensions, but the enabling legislation, the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, had not passed Parliament as this guide was written, and the ATO’s own guidance has stated that the measure is not yet law. Until it passes, the standing legislated threshold of $1,000 is technically what applies to assets first used from 1 July 2026. This guide covers the full rules, the state of the cliff, how the cashflow maths works on real purchases, and how to make asset decisions sensibly while Parliament finishes the paperwork. It is general information only, not tax advice.
Published: July 2026
Three positions, in sequence, tell the whole story.
The practical translation: an asset bought and installed this month will almost certainly qualify for the $20,000 write-off once the Bill passes with its 1 July 2026 start date, but the deduction should be treated as pending rather than banked, and anyone lodging or planning around it should confirm passage first. That is not pedantry. It is the difference between tax planning and tax hoping. For broader Budget context see Federal Budget 2026-27 for small businesses and the complete end of financial year checklist 2026.
Assuming the $20,000 setting, whether under last year’s law or this year’s Bill, the mechanics reward precision.
An asset at $20,000 or more is not denied a deduction. It takes the slower road. Under the simplified depreciation rules, it enters the small business pool and depreciates at 15 per cent in the first year and 30 per cent of the declining balance each year after. Two pool features are worth more than they get credit for. If the entire pool balance falls below $20,000 at the end of an income year, the whole remaining balance is written off at once. Second-element costs (later improvements to an asset already written off) have their own immediate-deduction pathway under the rules.
The pool is also the answer to the cliff scenario. If, against expectation, the Bill failed and 2026-27 ran at the $1,000 default, a $15,000 purchase would not lose its deduction. It would enter the pool and return roughly $2,250 of deductions in year one and 30 per cent of the balance annually thereafter. The write-off’s entire value is acceleration: the same total deduction, front-loaded.
A base rate company (company tax 25%) buys an eligible machine for $18,000 GST-exclusive.
The total deductions over the life of the asset converge. What differs is timing. If the business is cash-tight this year, acceleration matters. If the business is loss-making or already has large deductions, the urgency of acceleration falls. Price the concession as financing, not as a discount on the machine.
A trades business buys five tools and machines at $7,500, $12,000, $9,800, $15,500 and $19,200 in one year. Each is under $20,000. Under a live $20,000 threshold, total write-off is $64,000, tax benefit at 25% about $16,000 in year one. That is why “per asset” is the phrase owners should tattoo next to the threshold number.
Cashflow planning around large purchases still matters. Use tools such as the cash flow forecast calculator when the asset decision is large relative to working capital.
What is the instant asset write-off threshold for 2026-27?
As at July 2026, announced but not enacted: the Budget of 12 May 2026 committed to a permanent $20,000 threshold from 1 July 2026, but the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 had not passed Parliament, so the standing legislated threshold of $1,000 technically applies until it does. The measure is drafted to apply from 1 July 2026 once law.
Was the $20,000 threshold available for the year ended 30 June 2026?
Yes, with certainty for eligible assets under $20,000 first used or installed ready for use by 30 June 2026, under the legislated 2025-26 extension.
Who is eligible for the write-off?
Small businesses with aggregated annual turnover under $10 million using the simplified depreciation rules. Aggregated means connected entities and affiliates count together, which is where groups near the threshold most often fail the test.
Does the $20,000 apply per asset or per year?
Per asset. Multiple eligible purchases in the same year are each written off in full, provided each individual asset costs less than $20,000, GST-exclusive for registered businesses, and is operational within the year.
I ordered equipment in June but it arrived in July. Which year do I claim?
The year it was first used or installed ready for use, so the later one. Ordering and paying are not the test. Operational status is, and the delivery and installation evidence supports the claim date.
What happens to assets costing $20,000 or more?
They enter the small business pool and depreciate at 15 per cent in the first year and 30 per cent of the balance thereafter. If the whole pool balance drops below $20,000 at an income year’s end, the remainder can be written off entirely, a rule worth checking every June.
Can I buy a car under the instant asset write-off?
Rarely in practice. Passenger cars are governed by the car cost limit and almost none cost under the threshold, while utes, vans and trucks with a payload of one tonne or more are not cars for these rules and can qualify when under $20,000.
Should I wait for the Bill to pass before buying assets this year?
Buy on business need. The deduction follows the law either way, instantly if the measure passes as expected, through the pool if not. What to avoid is lodging or committing on the assumption of the $20,000 threshold for 2026-27 before assent. Confirm passage with your agent before returns rely on it.
Does the write-off reduce the cash I pay for the asset?
No. You still pay the supplier in full. The benefit is a faster tax deduction, which improves tax cashflow timing if you have taxable profits to absorb it.
Is this tax advice?
No. This is general information. Asset eligibility, aggregation tests and depreciation choices are technical and depend on your facts. Confirm with your registered tax adviser before lodging or restructuring purchases around the threshold.
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We review and check this guide periodically. At the time of writing (July 2026), all information was current. Scale Suite is a registered BAS Agent, not a licensed tax advisor or financial advisor. This content is general information only and does not constitute professional tax, financial, or legal advice. Some details may change over time.
Scale Suite is a Sydney-based provider of outsourced finance and HR services for Australian SMEs. We deliver bookkeeping, financial reporting, payroll processing, fractional CFO support, recruitment, employee onboarding, people and culture support, and fractional HR oversight, all as a fully embedded team that works inside your business.
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