Tax & equipment · Last reviewed 22 September 2026
Instant asset write-off 2026-27: what you can claim, and when
Status, 22 September 2026. This is now law, assented 26 August 2026.
The $20,000 threshold is permanent from 1 July 2026 for businesses with aggregated turnover under $10 million, under the Treasury Laws Amendment (Tax Reform No. 2) Act 2026 (No. 71, 2026). The $20,000 threshold was not amended. The same Act lifts the low pool value threshold to $20,000 and suspends the simplified depreciation lock-out rule through to 30 June 2027.
I wrote this for the operators I work with who buy plant, trucks and gear, and who need the rules in plain English. This is how the concession works.
The quick version
What you can claim
If your business has aggregated turnover under $10 million, you can immediately deduct the cost of eligible assets costing less than $20,000, in the year you first use them or have them installed ready for use.
The limit applies per asset, so several can be written off in the same year. Assets at $20,000 or more go into the small business simplified depreciation pool: 15% in the first year, 30% each year after.
You don't get $20,000 back. You get a deduction. For a company on the 25% base rate, a $19,000 asset written off reduces tax by around $4,750, assuming full business use and enough taxable income to absorb it. Not $19,000.
Eligibility
Are you eligible?
Four things need to be true:
- 01
Aggregated turnover under $10 million
Aggregated means your turnover plus that of connected entities and affiliates, not just the one ABN.
- 02
You use simplified depreciation
The write-off sits inside the small business simplified depreciation rules.
- 03
The asset costs less than $20,000
Under, not up to. And “cost” means more than the sticker price. See below.
- 04
It's first used or installed ready for use in the income year
Ordering and paying isn't enough.
The threshold test
What counts as “cost”, and why it trips people up
The threshold test isn't the number on the invoice line.
Included
The asset's price, plus what you spend transporting and installing it ready for use. A $19,000 machine with $1,500 delivery is a $20,500 asset. It misses the threshold, even though nobody would describe it as a $20,500 purchase.
Not reduced by a trade-in
The test uses the price before the trade-in credit. Buy a $25,000 vehicle, trade in your old one for $11,000, pay $14,000 out of pocket, and the asset still costs $25,000 for this purpose and must be pooled.
Interest isn't part of cost
If you finance the asset, the finance charges are deductible separately over the term. They don't go into the threshold test and they aren't written off up front.
Your deduction is limited to business use
The full cost has to be under the limit, but you claim the business-use percentage. An asset that's 70% business gets 70% of the deduction.
GST
The GST detail worth knowing
If you're registered for GST and can claim a full credit on the purchase, the $20,000 test applies to the GST-exclusive cost.
In practice a purchase up to roughly $21,999 including GSTcan still fall under the threshold. (At exactly $22,000 inc GST the ex-GST cost is $20,000, which fails the “less than” test.)
The catch is “full credit”. If the asset has private use, relates to input-taxed activities, or is a car where your credit is capped, you exclude only the credit you can actually claim. If you're not registered for GST, the full cost counts.
Timing
It's about use, not purchase
This is the single most common mistake I see.
The test is whether the asset is first used or installed ready for use in the income year. Not whether you ordered it, paid for it, or took delivery.
A machine that arrives on 28 June and sits in a crate until August is a next-year deduction. A vehicle ordered in May with a three-month lead time is a next-year deduction. If you're buying with a deadline in mind, check the lead time, not the invoice date.
Pooling
Assets over $20,000
Nothing is lost. The deduction is just slower.
Assets costing $20,000 or more go into the small business simplified depreciation pool, depreciated at 15% in the first income year and 30% each year after.
If the pool balance is under the low pool value threshold at year end, it can be written off in full. That threshold is now $20,000.
The simplified depreciation lock-out rule (which stops businesses re-entering the regime for five years after opting out) is suspended through to 30 June 2027.
Exclusions
Assets that are excluded
Some assets sit outside simplified depreciation entirely, and the general depreciation rules apply instead. The write-off isn't available for:
- Assets leased out, or expected to be leased out, for more than half the time on a depreciating asset lease. That last part matters: hire purchase and short-term hire agreements aren't depreciating asset leases. The ATO treats intermittent hire (or successive hires of the same asset to the same customer) totalling not more than six months as short-term. So a plant-hire or scaffolding business isn't automatically excluded. It depends on how long each asset is actually out. Worth checking rather than assuming.
- Capital works: buildings and structural improvements. Much of a shop or restaurant fit-out is capital works rather than a depreciating asset.
- Assets used in R&D activities.
- Assets already allocated to a low-value pool before you adopted simplified depreciation.
- Horticultural plants, including grapevines.
- Software allocated to a software development pool.
One more: if you claim car expenses using the cents per kilometre method, you can't also claim the car under simplified depreciation.
Use the estimator below to see the approximate first-year tax effect of a purchase. Enter the asset cost, your aggregated turnover and your tax rate.
Write-off estimator
Instant asset write-off calculator
What is the asset worth at tax time?
Aggregated turnover
Entity tax rate
First-year tax benefit
$4,500
Immediate deduction
$18,000
At your tax rate
25% company rate
Under $20,000, so the full cost is deductible in the year the asset is first used or installed ready for use. The deduction reduces tax payable at year end; it is not a rebate at purchase.
General information, not tax or financial advice. Figures use the $20,000 threshold now in force from 1 July 2026. Talk to your accountant before relying on any figure here.
One thing it can't know: whether your asset is eligible in your circumstances. Treat the output as an estimate to take to your accountant, not an answer.
Financed assets
Can you write off a financed asset?
Yes. And this is the part most guides skip entirely.
The write-off is based on the asset's costand when it's first used or installed ready for use. It's not based on how much you've paid out of your own pocket.
Buy a machine under a chattel mortgage, put down a deposit, have it installed and running before year end, and you're generally claiming on the asset's cost, not on the deposit. The loan and the deduction are separate questions.
That matters because cash position and deduction eligibility get conflated constantly. Plenty of operators assume that if they can't pay cash, the write-off is off the table. It isn't.
Two limits.The interest isn't part of the cost. Finance charges are deductible separately across the term. And the deduction is still limited to the business-use portion.
The structure matters too:
| Structure | Write-off? |
|---|---|
| Chattel mortgage | Yes. You hold the asset. |
| Hire purchase | Yes. You're generally the holder, provided it's reasonably likely you'll acquire the asset. |
| Finance lease | No. The lessor holds it, so there's no depreciation for you to claim. |
Under a lease you still deduct the lease rentals, so you're not left with nothing. What you lose is the timing: the deduction spreads across the term instead of landing in year one. If that timing is part of why you're buying, the structure is worth getting right. I cover it properly in the guide to hire purchase, chattel mortgage and lease.
And the obvious caveat, against my own interest: financing costs money. A deduction returns your marginal rate on the cost. You're still out the rest, plus interest. If the asset doesn't earn its keep, the tax treatment doesn't rescue the decision.
Vehicles
If the asset is a car
There's a separate ceiling that applies regardless of the write-off.
For 2026-27 the car limit is $69,883. You can't depreciate more than that whatever you paid, and the GST credit is capped at one eleventh of the limit (a maximum of $6,353).
A car above the limit is well past the $20,000 threshold anyway, so it's a pooling question rather than a write-off question. But check whether your vehicle is actually a “car”: the definition covers passenger vehicles designed to carry fewer than nine passengers and a load under one tonne, excluding motorcycles and similar vehicles. Payload is the gross vehicle mass shown on the compliance plate, less the vehicle's basic kerb weight. Plenty of heavier utes clear one tonne and sit outside the limit entirely.
Watch-outs
Common mistakes
Assuming the whole cost comes back
It's a deduction, not a rebate.
Pricing off the invoice line
Delivery and installation count. Trade-ins don't reduce it.
Buying on 29 June
If it isn't installed ready for use, it's next year.
Forgetting turnover is aggregated
Connected entities and affiliates count.
Treating the threshold as GST-inclusive
If you can claim a full credit, you have more room than you think.
Assuming hire-out equipment is always excluded
It depends on whether it's on a depreciating asset lease. Short-term hire generally isn't.
Leasing when the timing mattered
No holding, no depreciation, no write-off.
Assuming the $20,000 is locked in
It is now law.
Also in this Bill
Loss carry-back
Worth knowing, because I've barely seen it covered. The same law lets companies(corporate tax entities that aren't significant global entities) carry a tax loss back against tax paid in either or both of the two previous income years, as a refundable tax offset.
It's capped at the company's franking account balance at the end of the loss year, and it's restricted to corporate tax entities. Ordinary family trusts, ordinary partnerships and sole traders are out. Lodgement requirements apply across the current year and the five preceding years.
If you're incorporated and you've had a hard year after two good ones, raise it with your accountant.
FAQ
Write-off questions, answered
What is the instant asset write-off threshold for 2026-27?
$20,000 per asset, for businesses with aggregated turnover under $10 million, now permanent law from 1 July 2026.
Does the $20,000 include GST?
If you're registered for GST and can claim a full credit, the threshold applies to the GST-exclusive cost, so up to about $21,999 including GST can qualify. If you can only claim a partial credit, you exclude only the credit you can actually claim. If you're not registered, the full cost counts.
What counts towards the asset's cost?
The price plus transport and installation costs. A trade-in doesn't reduce it. The test uses the price before the trade-in credit. Interest on finance isn't part of the cost; it's deductible separately over the term.
Can I claim the instant asset write-off on a financed asset?
Yes, under a chattel mortgage or hire purchase. The write-off is based on the asset's cost and when it's first used or installed ready for use, not on how much you've repaid. A finance lease is different: the lessor holds the asset, so there's no write-off for you, though you still deduct the lease rentals.
Can I write off more than one asset?
Yes. The limit applies per asset, so multiple assets each under the threshold can each be written off in the same income year.
What happens to assets over $20,000?
They go into the small business simplified depreciation pool: 15% in the first income year, then 30% each year after.
Does it matter when I pay for the asset?
Less than you'd think. The test is when the asset is first used or installed ready for use in the income year, not the invoice or payment date.
Which assets are excluded?
Assets leased out more than half the time on a depreciating asset lease, capital works such as buildings and structural improvements, assets used in R&D, assets already in a low-value pool, horticultural plants, and software in a software development pool. You also can't claim a car under simplified depreciation if you use the cents per kilometre method for it. Note that short-term hire agreements aren't depreciating asset leases, so hire businesses aren't automatically excluded.
Related
Sources
- Treasury Laws Amendment (Tax Reform No. 2) Act 2026, No. 71, 2026 · Last verified 22 September 2026
- ATO — $20,000 instant asset write-off (new legislation) · Last verified 16 August 2026
- ATO — Instant asset write-off for eligible businesses · Last verified 16 August 2026
- ATO — assets and exclusions · Last verified 16 August 2026
- ATO — car thresholds from 1 July · Last verified 16 August 2026
- ATO — company tax rates · Last verified 16 August 2026
- ITAA 1997 s 40-40 — who holds a depreciating asset · Last verified 16 August 2026
- Parliament of Australia — Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 · Last verified 16 August 2026
- Senate Economics Legislation Committee — inquiry and report · Last verified 16 August 2026
- Parliamentary Library Bills Digest No. 70, 2025-26 · Last verified 16 August 2026
By James Baker · Founder, Avoir
Founder of Avoir and a commercial finance specialist focused on asset and equipment finance for Australian transport, civil and construction businesses.
Last reviewed: 22 September 2026
This is general information, not tax or financial advice. Avoir connects businesses with lenders. We are not accountants. I don't prepare your return or advise on your tax position. Confirm your position with your accountant or registered tax agent. See our editorial policy and how we make money. See our data sources page for every dataset behind this site.
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