3 min read · Updated . Reviewed by James Rock (National Partnerships Director).
On this page 8
- What is the instant asset write-off?
- Who can use the instant asset write-off?
- Does the limit apply to each asset?
- What happens to equipment that costs more than $20,000?
- Is most plant over the limit?
- Where does insurance fit?
- What should you ask your accountant?
- Buying equipment this financial year?
What is the instant asset write-off?
It lets a small business immediately deduct the business portion of an eligible asset costing less than $20,000. The May 2026 Budget announced that the $20,000 limit would be made permanent for businesses with turnover under $10 million, and it’s now law: Schedule 2 of the Treasury Laws Amendment (Tax Reform No. 2) Act 2026. Your accountant can confirm how it applies to your asset and its dates.
For the 2025-26 income year, a business with aggregated turnover under $10 million that uses the simplified depreciation rules can immediately deduct the business portion of an asset costing less than $20,000. The asset must be first used or installed ready for use on or after 1 July 2023. That’s according to the ATO, page updated 28 August 2026.
Who can use the instant asset write-off?
- Your aggregated turnover is under $10 million. Aggregated turnover includes your business plus affiliates and connected entities.
- You use the simplified depreciation rules.
- The asset costs less than $20,000.
- You claim it in the income year the asset is first used or installed ready for use.
Does the limit apply to each asset?
Yes. The limit applies per asset, not per business. The ATO’s example has a sole trader writing off several separate assets in one year, each under the limit. A $4,500 MIG welder delivered ready for use in March 2026, for example, can be written off in full in the 2025-26 return.
What happens to equipment that costs more than $20,000?
It goes into the small business pool, where it depreciates at 15% in the first year and 30% each year after. The ATO’s own example: a $40,000 ute used 40% for business can’t be written off, because the total cost is over the limit even though the business portion is $16,000. That business portion goes into the pool instead.
| Illustration: a $150,000 machine, 100% business use | Deduction |
|---|---|
| Year 1 (15%) | $22,500 |
| Year 2 (30% of the $127,500 left) | $38,250 |
| Year 3 (30% of the $89,250 left) | $26,775 |
An illustration of the pool rates only, assuming nothing else is in the pool. Your accountant will work out your actual deductions.
Is most plant over the limit?
Yes. Every one of the real policies below insures equipment worth many times the $20,000 limit, so for excavators, trailers and telehandlers the small business pool is the rule, not the write-off.
| Real policy | Insured value | Five-year premium |
|---|---|---|
| Excavator | $171,700 | $5,511 |
| Mini excavator | $55,209 | $4,310 |
| Truck trailer | $141,977 | $11,190 |
| Telehandler | $703,150 | $21,556 |
Where does insurance fit?
The write-off changes when you claim a tax deduction. It doesn’t change what the machine is worth to your business or to your lender. If the equipment is financed, the lender will still need a certificate of currency before settlement, and a fixed multi-year premium can run for the whole finance term.
Australian lenders wrote $20.8 billion of new plant and equipment finance for small businesses in 2025-26, about 35% of all their new fixed-term borrowing.
What should you ask your accountant?
- Is our aggregated turnover under $10 million, and do we use the simplified depreciation rules?
- Which of this year’s purchases are under $20,000 each?
- When will each asset be first used or installed ready for use?
- How does our finance structure affect who claims the depreciation?
General information only, not tax advice. Check with your accountant how the write-off applies to your business.
Buying equipment this financial year?
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Frequently asked questions
What is the instant asset write-off limit for 2025-26?
The ATO gives a limit of $20,000 per asset for businesses with aggregated turnover under $10 million using the simplified depreciation rules, for assets first used or installed ready for use on or after 1 July 2023.
What happens if my equipment costs more than $20,000?
It goes into the small business pool, where it depreciates at 15% in the first year and 30% each year after.
Does the write-off apply per asset?
Yes. The ATO applies the limit to each asset, so several assets under $20,000 can each be written off.
Is the instant asset write-off permanent?
Yes. The May 2026 Budget announced that the $20,000 instant asset write-off would be made permanent for small businesses with turnover under $10 million, and it’s now in Schedule 2 of the Treasury Laws Amendment (Tax Reform No. 2) Act 2026. Check how it applies to your asset with your accountant.
Does the write-off affect my insurance?
No. It changes your tax timing. A financed machine still needs insurance and a certificate of currency.
Sources
- business.gov.au: What does the Budget mean for your business? (13 May 2026)
- Federal Register of Legislation: Treasury Laws Amendment (Tax Reform No. 2) Act 2026, No. 71, 2026 (Schedule 2)
- Australian Taxation Office: Instant asset write-off for eligible businesses (updated 28 August 2026)
- Australian Bureau of Statistics: Lending Indicators, June quarter 2026
- Product information and approved item list from our specialist insurance partner (August 2026)
General information only, not personal advice. Read the policy wording before you buy.
