Instant Asset Write-Off Australia: What Small Businesses Need to Know in 2025–26
The instant asset write off Australia rule allows small businesses to claim immediate tax deductions on eligible assets costing less than $20,000. For the 2025–26 financial year, this concession can significantly reduce your taxable income and improve cash flow if applied correctly.
If you run a small business in Australia, the instant asset write-off can be a useful tax concession when purchasing equipment, tools, office furniture, computers, or other eligible business assets. Instead of claiming depreciation over several years, eligible businesses may be able to claim an immediate deduction for the business-use portion of an asset’s cost.
For the 2025–26 income year, eligible small businesses can generally claim an immediate deduction for assets costing less than $20,000 per asset, provided the asset is first used or installed ready for use by 30 June 2026. The concession is available to businesses with an aggregated annual turnover of less than $10 million that apply the simplified depreciation rules.
At DIA Taxation, we help small businesses understand what they can claim, how timing affects deductions, and how to stay compliant with ATO requirements.
What Is the Instant Asset Write-Off?
The instant asset write-off allows eligible small businesses to immediately deduct the cost of certain depreciating assets, rather than spreading the deduction over the effective life of the asset. This rule is part of the simplified depreciation regime for small business entities.
This can benefit businesses by improving cash flow, simplifying tax reporting, and bringing forward deductions where the purchase meets the eligibility rules.
What Is the Current Instant Asset Write-Off Threshold?
The current threshold is $20,000 per asset for eligible small businesses for the 2023–24, 2024–25 and 2025–26 income years. This means that if multiple eligible assets each cost less than $20,000, each asset may potentially be claimed immediately.
This is an important point for business owners. The threshold is not a single yearly cap across all purchases. It applies per asset, subject to the rules.
Who Can Claim the Instant Asset Write-Off?
Generally, your business may be eligible if:
- your aggregated annual turnover is less than $10 million
- you are using the simplified depreciation rules
- the asset is a depreciating asset
- the asset costs less than $20,000
- the asset is first used or installed ready for use within the relevant income year
Eligibility should always be checked carefully, especially if your business structure is more complex or your turnover is close to the threshold.
When Must the Asset Be Purchased or Installed?
A common misunderstanding is that paying for an asset before year-end is enough. In reality, the asset must be first used, or at least installed ready for use, by the end of the relevant income year. For the current rules, that generally means by 30 June 2026 for the 2025–26 year.
For example, if you order a business asset in June 2026 but it is not delivered and installed until July 2026, the deduction would usually fall into the next income year instead.
What Assets Can Small Businesses Claim?
Eligible assets may include items such as:
- laptops and desktop computers
- office furniture
- tools and equipment
- work-related machinery
- business-use vehicles, subject to applicable tax rules
- commercial appliances and technology used in the business
The claim is generally limited to the business-use portion of the asset. If an item is used partly for private purposes, only the business-related share is deductible.
Can You Claim a Car Under the Instant Asset Write-Off?
In some cases, a business-use vehicle may qualify, but the claim depends on several factors, including business use, cost limits, and the relevant tax rules applying to motor vehicles. The deduction is still limited to the business-use percentage, and other tax rules can affect how much is claimable.
Because motor vehicle claims often involve extra considerations, it is worth getting advice before lodging your return.
Are Second-Hand Assets Eligible?
Yes, eligible small businesses may generally claim both new and second-hand assets, provided all eligibility conditions are met.
This can be useful for trades, transport operators, and other businesses that buy quality used equipment for commercial use.
What Happens If the Asset Costs $20,000 or More?
If the cost of the asset is $20,000 or more, it generally cannot be fully deducted under the instant asset write-off threshold. Instead, it is usually added to the small business depreciation pool and depreciated under the simplified depreciation rules, assuming the business is eligible for that system.
What Assets Are Excluded?
Not every purchase qualifies. Some items are excluded, including assets that are dealt with under other tax provisions, such as certain capital works. That means building improvements, structural works, and some fit-out costs may not fall under the instant asset write-off.
This is why it is important to review the nature of the expense before assuming it can be written off immediately.
Why the Instant Asset Write-Off Matters
For many small businesses, the instant asset write-off can make it easier to invest in equipment, replace outdated tools, or upgrade office technology before year-end. It may also help reduce taxable profit in the relevant year, while keeping the deduction process simpler than standard depreciation methods.
That said, the rules must be applied correctly. Incorrect claims can create problems later if the asset does not qualify, was not ready for use in time, or includes a private-use component that was not adjusted properly.
Practical Tips Before You Claim
Before claiming the instant asset write-off, make sure you:
- confirm your business is under the $10 million aggregated turnover threshold
- check the asset is an eligible depreciating asset
- confirm the cost is less than $20,000 per asset
- ensure the asset was first used or installed ready for use by year-end
- calculate the correct business-use percentage
- keep tax invoices, finance records, and supporting documents on file
How DIA Taxation Can Help
At DIA Taxation, we assist sole traders, companies, trusts, and small business owners across Australia with tax planning, depreciation claims, business deductions, BAS, and year-end compliance.
If you are considering buying equipment or want to know whether an asset qualifies for immediate deduction, we can help you review the purchase before you lodge your tax return.
Speak With DIA Taxation
Need help working out whether your business can claim the instant asset write-off?
DIA Taxation can help you:
- review asset purchases
- calculate business-use percentages
- apply the correct depreciation treatment
- prepare compliant tax returns for your business
Contact DIA Taxation today for tailored tax advice and support.
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Frequently Asked Questions
What is the instant asset write-off in Australia?
The instant asset write-off allows eligible small businesses to claim an immediate deduction for the business-use portion of certain depreciating assets, rather than claiming depreciation over several years.
What is the instant asset write-off threshold for 2025–26?
The threshold is $20,000 per asset for eligible small businesses for the 2025–26 income year.
Who is eligible for the instant asset write-off?
Generally, businesses with an aggregated annual turnover of less than $10 million using the simplified depreciation rules may be eligible.
Can I claim a second-hand asset?
Yes, eligible businesses may generally claim both new and second-hand assets if the rules are met.
Does the asset need to be installed before 30 June?
Yes. The asset generally needs to be first used or installed ready for use by the end of the income year to qualify for that year’s deduction.
Can I claim an asset used partly for personal use?
Only the business-use portion is generally claimable.
Written by
Imran Fazil
CPA | CA | Registered Tax Agent
15+ Years Industry Experience
Imran Fazil is the Co-Founder and CEO of DIA Taxation, an Australian-owned boutique accounting firm providing tax, accounting, bookkeeping, and advisory services. He is known for combining strong technical knowledge with practical commercial insight, helping individuals and businesses navigate tax matters with clarity and confidence.
With over 15 years of experience in taxation and advisory services, Imran specialises in strategic tax planning, GST and BAS compliance, and trust and company taxation. His experience across construction, property, professional services, and logistics, together with a Big 4 background, supports a strong, commercially focused, and compliance-driven approach.