Five Months to Maximise the $20,000 Instant Asset Write-Off: Strategic Timing for Small Business Investment

Introduction

Small business owners planning equipment upgrades, technology purchases, or vehicle acquisitions have until 30 June 2026 to take advantage of the $20,000 instant asset write-off threshold. After this date, the threshold reverts to $1,000 unless the government legislates a further extension.

The instant asset write-off allows eligible small businesses to claim the full cost of qualifying assets as an immediate tax deduction in the year of purchase, rather than depreciating them over several years. For a business purchasing a $15,000 piece of equipment, this means claiming the entire $15,000 deduction upfront, improving cash flow in the current financial year.

The 30 June 2026 deadline

Parliament passed the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025 in November 2025, extending the $20,000 threshold for the 2025-26 financial year. The ongoing legislated threshold remains at $1,000, and without further government action, this lower amount will apply from 1 July 2026.

Industry groups including the Council of Small Business Organisations Australia (COSBOA) have advocated for a permanent increase to $150,000, arguing that annual extensions create unnecessary uncertainty for business planning. Chartered Accountants Australia and New Zealand has echoed these concerns, noting that the year-by-year approach undermines confidence among small business owners. However, the government has made no commitment to permanent changes, so businesses should proceed on the assumption that this extension will be the last.

Eligibility requirements

To qualify for the instant asset write-off, your business must meet the following criteria.

Your aggregated annual turnover (in either the previous year or in the current year) is less than $10 million;
You must elect to use the simplified depreciation rules for the relevant income year;
The asset must cost less than $20,000 (excluding GST if your business is registered for GST, or including GST if not registered); and
The asset must be first used or installed ready for use for a taxable purpose by 30 June 2026.

Th final point above catches many business owners out. Purchasing an asset before 30 June is insufficient – the asset must be operational by that date. If you order equipment on 25 June but delivery occurs on 3 July, you cannot claim the write-off for the 2025-26 financial year. Allow adequate lead time for delivery and installation when planning purchases.

What can be claimed

The $20,000 threshold applies per asset, allowing businesses to write off multiple eligible purchases in the same financial year. Common claims for business across all sectors from manufacturing to hospitality could include:

tools and equipment including power tools, diagnostic equipment, welding machines, and workshop fittings etc.;
technology purchases such as computers, tablets, software, printers, and point-of-sale systems;
Fit-out costs for business premises, including shelving, display units, and fixed furniture;
coffee machines, commercial refrigeration units, display cabinets, and kitchen equipment; or
second-hand assets can also qualify on the same basis as new purchases, provided all other eligibility criteria are met.

Remember, the deduction is limited to the business-use portion of the asset’s cost. If the asset is partly used for private purposes, only the business-use percentage is deductible.

The car limit complication

Vehicle purchases require particular attention. For passenger vehicles designed to carry fewer than nine passengers with a load capacity under one tonne, the car limit applies. For the 2024-25 income year, this limit is $69,674.

However, the instant asset write-off threshold operates independently of the car limit. If a passenger vehicle costs more than $20,000, the vehicle cannot be immediately written off regardless of the car limit. The business must instead add the vehicle (up to the car limit amount) to the small business depreciation pool, where it depreciates at 15% in the first year and 30% in subsequent years.

This distinction matters. A small business purchasing a $45,000 utility vehicle for business purposes might assume the car limit allows an immediate deduction. The entire cost of the asset must be below $20,000 to qualify for instant write-off. Because the utility vehicle costs $45,000, the business must depreciate it through the pool.

Commercial vehicles with load capacity over one tonne, such as many tradies’ vehicles, are not subject to the car limit. A $18,000 commercial van used entirely for business purposes would qualify for immediate write-off.

Strategic timing considerations

For businesses already planning capital expenditure, bringing purchases forward to before 30 June 2026 delivers genuine cash flow benefits through accelerated deductions. A business purchasing $60,000 worth of equipment in individual items under $20,000 each could claim the full amount in the 2025-26 financial year, rather than depreciating over several years. Although you would eventually claim the deductions through depreciation regardless, the instant asset write-off allows you to claim them sooner, reducing your tax bill in the current year.

However, the tail should not wag the dog. Purchasing assets your business does not need, purely to generate tax deductions, rarely makes commercial sense. The best approach involves reviewing planned capital expenditure and considering whether bringing forward genuine business purchases to before 30 June 2026 aligns with your operational requirements and cash flow position.

Also consider the lock-out rules. If your business has previously opted out of the simplified depreciation regime, you ordinarily cannot re-enter for five years. This restriction remains suspended until 30 June 2026, allowing businesses that previously opted out to access the write-off. Speak with your advisor about whether opting back in makes sense for your circumstances.

Planning for the months ahead

With five months until the threshold potentially drops to $1,000, now is the time to plan and:

• identify equipment, technology, or vehicles your business needs in the next 12 to 18 months;
• assess your cash flow position and determine whether any of these purchases could sensibly be brought forward to the current financial year;
• factor in delivery and installation timeframes to ensure assets are operational by 30 June 2026; and
• speak with your Moore Australia advisor about how the write-off fits within your broader tax planning strategy.

The instant asset write-off has provided valuable support for small business investment since its introduction. Whether this support continues beyond 30 June 2026 remains uncertain. Businesses with genuine capital expenditure needs should consider acting while the current threshold remains available.