By Joshua Occhino, Co-founder, Ezyiah
Short answer: Yes, the $20,000 instant asset write-off is now permanent law. The Treasury Laws Amendment (Tax Reform No. 2) Act 2026 received Royal Assent on 26 August 2026. From 1 July 2026, small businesses with aggregated turnover under $10 million can immediately deduct the full cost of each eligible depreciating asset costing less than $20,000, in the income year it's first used or installed ready for use. The limit applies per asset, so several assets can each be written off.
What changed, and when?
On 12 May 2026, the Government announced in the 2026–27 Budget that it would make the $20,000 limit permanent from 1 July 2026. That's now law. The ATO's $20,000 instant asset write-off page confirms that small businesses under $10 million aggregated turnover can deduct:
- the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use in the income year
- certain later improvement costs (the "second element" of cost) for an asset already written off in a prior year, where those costs are under $20,000
For 2025–26 (1 July 2025 to 30 June 2026), the $20,000 limit already applied under the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025. So there's no gap between the years.
What about assets costing $20,000 or more?
They go into the small business simplified depreciation pool. The pool is depreciated at 15% in the first income year and 30% each year after that. If the pool balance is under $20,000 at the end of an income year, it can be written off too.
The rule that stops a business re-entering simplified depreciation for five years after opting out remains suspended until 30 June 2027.
Who qualifies?
- Turnover: aggregated turnover under $10 million.
- Simplified depreciation: the business uses the simplified depreciation rules for small business.
- Timing: the asset is first used, or installed ready for use, in the income year you're claiming. Ordering or paying isn't enough.
- Per asset: each asset must cost less than $20,000.
- New or second-hand: both can qualify.
Where do write-off claims usually go wrong?
These checks come up again and again in practice:
- GST. For a business registered for GST, test the cost excluding the GST credit, not the GST-inclusive price. Claim the GST separately on the BAS.
- Cars. Passenger vehicles are subject to the car limit, which caps the cost you can use and is set by the ATO for each income year. Use the figure for the year the car was first used.
- Private use. Only the business-use portion is deductible.
- Installed ready for use by year end. An asset delivered in June but not installed until July belongs to the next year.
- Coded as an expense. Assets coded straight to a repairs or equipment expense account lose the record of what was bought and when it was first used. Code them to an asset account and record the first-use date.
- Exclusions. Some assets, such as horticultural plants and certain software development pools, are dealt with under other rules. Check the ATO simpler depreciation guidance for exclusions.
How should firms advise clients now?
Because the $20,000 limit is permanent, purchase timing is now about cash flow and genuine business need, not about beating an expiry date. Remind clients that the write-off is a deduction, not a refund. Its value depends on their marginal tax rate, so a $15,000 asset isn't "free".
How Ezyiah helps
Ezyiah is an AI bookkeeper with its own double-entry ledger. It reconciles live bank feeds with AI, and its Depreciation Schedule tracks assets alongside the BAS, P&L and Balance Sheet in the same books. The asset purchase and its GST credit come from the same transaction, so the numbers agree. Your accountant reviews the treatment and approves it before lodgement.
See how it works for business owners and accounting firms.
Frequently asked questions
Is the $20,000 instant asset write-off permanent?
Yes. It was legislated by the Treasury Laws Amendment (Tax Reform No. 2) Act 2026 (Royal Assent 26 August 2026) and applies from 1 July 2026.
Is the $20,000 limit GST-inclusive?
For businesses registered for GST, the cost is tested excluding the GST you can claim as a credit.
Can I write off several assets?
Yes. The limit applies per asset, so each one costing less than $20,000 can be written off.
What if my turnover is $10 million or more?
The small business instant asset write-off doesn't apply. Assets are depreciated under the general rules.
