The deliberate exception to spreading an asset's cost over time
Depreciation, as covered in its own guide, spreads an asset's cost over several years.
The instant asset write-off is the deliberate exception — letting many small businesses skip that spreading and claim the full cost immediately.
The short answer
From the 2026–27 income year, eligible small businesses with aggregated turnover under $10 million can immediately deduct the business portion of an eligible asset costing less than $20,000, rather than depreciating it over several years. The threshold applies per asset, so multiple eligible purchases can each be written off in full. The $20,000 threshold is now permanent under legislation that received assent on 26 August 2026.
The core conditions
Turnover threshold. Your business's aggregated annual turnover must be under $10 million.
Cost threshold. Each asset must cost less than $20,000 — excluding GST if you're registered, including GST if you're not.
Timing. For the 2026–27 year, the asset must be first used, or installed ready for use, during that income year to be claimed for that year — simply ordering or paying for it isn't enough. Confirm that the asset and your business satisfy the current eligibility rules before committing.
New or second-hand. Both qualify, with some exclusions and limits applying to specific asset types.
What happens above the threshold
An asset costing $20,000 or more can't be instantly written off — it goes into the general small business depreciation pool instead, depreciated at 15% in the first year and 30% each year after, exactly as described in the depreciation guide. There's no way to artificially split a single asset into smaller components purely to fit under the threshold — the ATO looks at the total cost of the asset as a whole.
A simple example
| Purchase | Cost | Treatment |
|---|---|---|
| New laptop | $2,800 | Instant write-off — fully deductible this year |
| Second-hand van | $18,500 | Instant write-off — fully deductible this year |
| New ute | $62,000 | Exceeds the threshold — depreciated through the small business pool over several years, subject to the separate car limit |
The specific timing trap
The single most common way businesses miss out on this deduction is timing: an asset ordered in June but not delivered and ready for use until the following month falls into the next income year instead, even though it was paid for earlier. If you're planning a purchase specifically to use this concession before 30 June, the asset genuinely needs to be in use, or ready for use, by that date — not just ordered.
Why this threshold is worth watching, not assuming
The instant asset write-off threshold changed repeatedly in earlier years, but the $20,000 threshold is now permanent from 1 July 2026. Eligibility still depends on the business, the asset, its cost and when it is first used or installed ready for use. Confirm current ATO guidance for the income year and your circumstances before relying on the concession.
A quick self-check
Does my business's aggregated turnover fall under the $10 million threshold?
Is the asset I'm considering under $20,000, and will it genuinely be ready for use before the relevant deadline?
Am I confirming the current threshold for the specific income year, rather than assuming it hasn't changed?
Have I kept the tax invoice and evidence the asset was actually in use by the deadline?
Free official resource
The ATO confirms the current instant asset write-off threshold, eligibility and timing requirements.
ato.gov.au — Instant asset write-off for eligible businesses https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business/instant-asset-write-off
When should you get professional help?
you're planning purchases specifically to make use of this concession before the deadline;
you're not sure whether your business meets the turnover threshold;
you're buying a higher-value asset like a vehicle and want to understand how the car limit interacts with this rule; or
you want your purchase and asset register timing confirmed before you commit to a deadline-driven decision.
Continue learning
→ What Is Depreciation — and Why Can't I Always Claim an Asset Immediately?
→ Should I Buy, Lease or Finance Business Equipment?
→ Should I Buy a Vehicle Through My Business or Personally?
SKC Accounting | Knowledge Centre | Knowledge Guide 061
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.