The $20,000 instant asset write-off is now permanent from 1 July 2026, which makes it tempting to buy first and think about tax later. The ATO's rules have a timing test that is easy to miss.
The rule
The ATO says businesses with aggregated annual turnover of less than $10 million that use the simplified depreciation rules can claim an immediate deduction for the business portion of an eligible depreciating asset that costs less than $20,000. The asset must be first used, or installed ready for use, in the income year you claim it.
In practice, paying the invoice on 29 June but not using the equipment until July does not get you the deduction in the year you paid. The year you start using it, or have it installed and ready to use, is the year that counts.
A few details that trip people up
- The limit applies per asset. The ATO says you can claim more than one asset, as long as each one costs less than $20,000.
- Only the business share counts. If a laptop or tool is also used privately, you can only claim the business portion.
- Assets over the limit are generally added to the small business pool and written off over time. Pool balances under $20,000 at the end of the income year can be written off.
- You must use simplified depreciation. The write-off is not available if you are outside those rules.
What to do
- Keep the tax invoice and note the date the asset was first used or installed ready for use.
- Record your business use percentage at purchase, and keep any evidence behind it.
- Check your turnover against the $10 million test before you commit.
- Do not buy only for the deduction. A deduction returns part of the cost, not all of it, so make sure the purchase suits your cash flow.
- Ask your accountant before a large purchase to confirm you qualify.
This is general information only, so check how it applies to you before buying.