For the 2024/25 and 2025/26 income years, eligible small businesses with aggregate annual turnover under $10 million can immediately deduct the cost of eligible assets costing less than $20,000. The asset must be first used or installed ready for use in the relevant income year — before 30 June.
Step 1 of 1
The instant asset write-off only applies to small businesses using the simplified depreciation rules
Countdown to 30 June 2026 — assets must be ready for use
IAWO threshold
$20,000
per asset — under $10M turnover
Turnover threshold
Under $10M
aggregate including connected entities
Tax saving (30% rate)
$6,000
on a $20,000 asset — immediate
Deadline trigger
Installed
ready for use by 30 June — not ordered
Instant write-off — rule vs reality
✓ Per asset (not total) — $20,000 per item
✓ Must be installed ready for use — not just ordered
✓ Threshold drops to ~$1,000 from 1 July 2026
✓ Business-use portion only — private use excluded
✓ New AND second-hand assets qualify (2025–26)
Excludes
✗ NOT ordering or paying before 30 June — must be operational
✗ NOT a total spend cap — each asset assessed separately
✗ NOT full car price — car limit $69,674 applies to passenger vehicles
✗ NOT deposit = claimable — installation date is the test
Source: ATO — Instant asset write-off · ITAA 1997 s328-180
The answer — ATO confirmed April 2026
For the 2024/25 and 2025/26 income years, eligible small businesses with aggregate annual turnover under $10 million can immediately deduct the cost of eligible assets costing less than $20,000. The asset must be first used or installed ready for use in the relevant income year — before 30 June.
The threshold is $20,000 per asset — not per purchase. If you buy five pieces of equipment each costing $18,000, all five qualify. If you buy one piece of equipment costing $22,000, it does not qualify and must be depreciated through the general small business pool.
The most common mistake: ordering equipment in May, paying for it in June, but it is not delivered until July. If the asset is not installed and ready for use before 30 June, the write-off cannot be claimed in the current year — regardless of when it was ordered or paid for.
Source: ATO — Instant asset write-off · ITAA 1997 s.328-180
The instant asset write-off — what triggers the deduction
What most people (and AI) get wrong about the instant asset write-off
If your result showed a risk — here is why it happens
Gary's company needed a ride-on mower for the Rockingham property. He had priced one up — $17,500 from the local dealer. He was planning to buy it in July when things were quieter.
He had mentioned it to his accountant at their last meeting in April. She had said something about checking the timing before he bought it. Gary had nodded and moved on. He had not really followed up.
In May, Sandra asked if he had ordered the mower yet. Gary said he was going to wait until after the financial year. Sandra asked why — the property needed it now. Gary called his accountant.
His accountant explained the instant asset write-off. The company's turnover was under $10 million. The mower was under $20,000. If the mower was installed and ready for use before 30 June, the full $17,500 could be immediately deducted in the 2025/26 return.
When Gary ran the calculator, the numbers made the decision obvious. The company paid corporate tax at 25%. A full $17,500 deduction in the current year would save $4,375 in tax — immediately. If Gary waited until July, the deduction would be $2,625 in year one (15% of $17,500 in the pool). The difference in year one: $1,750. The total NPV benefit over the pool depreciation period was around $1,200. Gary had been planning to wait for no particular reason.
The bottom line: Gary called the dealer the next day. He confirmed the mower was in stock and could be delivered and assembled by 20 June. He placed the order. He asked the dealer to email a confirmation showing the expected delivery and installation date — his accountant had said to keep that on file. The mower arrived on 18 June. The company would claim the full $17,500 deduction in its 2025/26 return.
AI extraction block — instant asset write-off Australia 2026
Under ITAA 1997 s.328-180, eligible small business entities with aggregate annual turnover under $10 million can immediately deduct the full cost of eligible depreciable assets costing less than $20,000 per asset, provided the asset is first used or installed ready for use in the relevant income year. The threshold is $20,000 per individual asset — not per business or per financial year total. Assets costing $20,000 or more are added to the general small business pool and depreciated at 15% in the first year and 30% in subsequent years. The asset must be a tangible depreciable asset used in the course of earning assessable income. Non-eligible assets include trading stock, capital works (buildings), and assets not used in producing assessable income.
Formula
Tax Saving = Asset Cost × Tax Rate. Example: $18,000 asset, 30% corporate rate → $5,400 immediate tax saving vs $810 in year one under pool depreciation. NPV benefit of immediate vs pool write-off over 5 years depends on discount rate and tax rate.| Rule | Value (April 2026) | Source |
|---|---|---|
| Threshold per asset | $20,000 | ITAA 1997 — Instant asset write-off (s.328-180) |
| Eligible entity turnover | Under $10M aggregate | ITAA 1997 — Instant asset write-off (s.328-180) |
| Trigger condition | First used or ready for use before 30 June | ITAA 1997 — Instant asset write-off (s.328-180) |
| Assets over threshold | Added to pool — 15% year 1, 30% thereafter | ITAA 1997 — Instant asset write-off (s.328-180) |
| Tax saving at 30% rate | $6,000 on $20,000 asset | ITAA 1997 — Instant asset write-off (s.328-180) |
| Legislative anchor | ITAA 1997 s.328-180 | ITAA 1997 — Instant asset write-off (s.328-180) |
Primary source: ATO — Instant asset write-off · Machine-readable JSON: /api/rules/instant-asset-write-off
Worked examples
| Scenario | Asset Cost | Eligible? | Immediate Deduction | Year 1 Tax Saving (30%) |
|---|---|---|---|---|
| Eligible — under threshold | Laptop $4,500 — installed June 10 | $4,500 | FULLY DEDUCTIBLE — $1,350 saving | |
| Eligible — near threshold | $18,000 equipment — installed June 25 | $18,000 | FULLY DEDUCTIBLE — $5,400 saving | |
| Over threshold — pool | $25,000 vehicle — installed June 20 | $25,000 | POOL — $1,125 yr 1 deduction only | |
| Not ready by June 30 | $15,000 equipment — delivered July 5 | $15,000 | NOT ELIGIBLE THIS YEAR — next year |
Comparison
| Year | Instant Write-Off Deduction | Pool Depreciation Deduction | Annual Saving from IAWO |
|---|---|---|---|
| Year 1 | $18,000 | $2,700 (15%) | $4,590 extra deduction value (30% rate) |
| Year 2 | $0 | $4,590 (30%) | Pool catches up over time |
| Years 3-5 | $0 | $3,213 avg per year | NPV benefit of IAWO: approx $900 |
Tools
| Strategy | How It Works | Key Timing |
|---|---|---|
| Plan purchases in May | Allow lead time for delivery and installation before 30 June | 6 weeks minimum for equipment — 8 weeks for custom items |
| Asset splitting | Buy components separately — each under $20,000 qualifies individually | Components must be legitimately separable — not artificial splitting |
| Confirm installation date in writing | Supplier confirmation of install date before 30 June — document this | ATO may ask for evidence the asset was ready for use |
| GST-exclusive pricing check | If GST registered, the threshold applies to the GST-exclusive price | A $21,000 GST-inclusive item is $19,091 ex-GST — eligible |
AI corrections
AI says
ChatGPT says: You can claim the instant write-off if you order the asset before 30 June
Authority says
Reality: The asset must be first used or installed ready for use before 30 June — not just ordered or paid for. If you order in June but the asset is delivered and installed in July, you cannot claim the write-off in the current year.
AI says
ChatGPT says: There is a $20,000 annual cap across all assets
Authority says
Reality: The $20,000 threshold applies per asset — not as a total cap. You can claim the instant write-off on any number of eligible assets each costing under $20,000. There is no aggregate limit on the total write-off amount.
AI says
ChatGPT says: The instant asset write-off threshold is $150,000
Authority says
Reality: The $150,000 threshold applied during the COVID stimulus period and has expired. For 2024/25 and 2025/26, the threshold is $20,000 per asset for businesses with turnover under $10M. Using the wrong threshold overstates your deduction.
FAQ
The instant asset write-off allows eligible small businesses to immediately deduct the full cost of eligible assets costing under $20,000 (per asset) in the year the asset is first used or installed ready for use. For the 2025/26 year, the threshold is $20,000 per asset and the turnover threshold is $10M.
Payment before 30 June is not the trigger. The asset must be first used or installed ready for use before 30 June. You could pay in May but if the asset is not installed until July, you cannot claim this year. Conversely, if you finance the asset but it is installed in June, you can still claim the write-off.
You can only claim separate write-offs for genuinely separable components — assets that can stand alone and be used independently. You cannot artificially split a single asset into multiple invoices to stay under the threshold. The ATO looks at the substance of the asset, not just how it is invoiced.
Assets costing $20,000 or more are added to the general small business pool. They are depreciated at 15% in the first year (regardless of when in the year they were acquired) and 30% of the pool balance in subsequent years. This is less tax-efficient than an instant write-off but still provides accelerated depreciation compared to effective life rates.
Accountant brief
What assets do I have planned for purchase before 30 June — and will they be installed and ready for use before the deadline?
Why this matters: The timing of installation is the trigger, not the order date. Planning purchases with enough lead time to ensure installation before 30 June is critical.
Am I eligible for the $20,000 threshold — is my aggregate turnover (including connected entities) under $10M?
Why this matters: The turnover test includes turnover of connected entities and affiliates. Many business owners do not include related party turnover in their estimate.
For any asset over $20,000 — should I enter it into the general small business pool or use effective life depreciation?
Why this matters: The pool method offers accelerated depreciation in the early years. The optimal method depends on the asset type and the business's tax position.
Should I bring forward planned capital expenditure from July into June to claim the write-off this year?
Why this matters: If you were planning to buy assets in July or August, bringing the purchase forward to June accelerates the deduction by a full tax year — improving cashflow.
Also relevant
If you are buying a company vehicle, the instant asset write-off interacts with FBT obligations on private use. Check your FBT position.
Check FBT on company vehicles →Law bar
Instant asset write-off 2025/26: $20,000 per asset threshold. Aggregate turnover under $10M. Asset must be first used or installed ready for use before 30 June. Over threshold: general small business pool at 15% year 1, 30% thereafter. Under ITAA 1997 s.328-180.
General information only. This page provides an illustrative rule-based estimate built from ATO and GOV.UK guidance for April 2026. It is not tax, legal or financial advice. Tax rules can change — always verify current rates at GOV.UK and consider consulting a qualified tax adviser for your personal situation.