What you can claim under the $20,000 Instant Asset Write-Off in 2026

Thinking of buying equipment before 30 June 2026?

The $20,000 instant asset write-off could reduce your tax bill significantly, but only if you meet the rules and act before the deadline.

This blog post is for small business owners, sole traders, and company directors in Australia who are planning to invest in tools, equipment, vehicles, or business assets this financial year.

Here, you will learn:

• What is the $20,000 instant asset write-off?
• Who is eligible and what conditions apply
• Exactly what assets you can and cannot claim
• Common mistakes that can lead to rejected claims
• How to maximise your deduction before EOFY

With the threshold expected to drop back to $1,000 after 30 June 2026, this is a limited opportunity. Getting your purchases and claims right now can make a noticeable difference to your cash flow and tax outcome.

What is the $20,000 instant asset write-off?

The instant asset write-off is a tax concession from the Australian Government that allows eligible small businesses to immediately claim the full cost of qualifying assets in the year they are first used or ready for use. Instead of spreading the cost over several years through depreciation, which is the usual approach for capital assets, you can claim the entire amount upfront.

For the 2025–26 income year, the threshold is $20,000 per asset. This means if you purchase equipment, technology, or other eligible assets costing less than $20,000 (excluding GST if you are GST-registered), you can claim the full amount in your tax return for that financial year. The $20,000 limit applies per asset, so multiple purchases can be claimed individually.

This measure is now law. It was confirmed on 4 April 2025, when the government announced an extension of the $20,000 instant asset write-off for another 12 months, continuing through to 30 June 2026. This follows ongoing support introduced in July 2023, when the threshold increased from $1,000 to $20,000.

If you want to ensure your records are accurate and you are claiming the full deduction available, our professional online bookkeeping team supports you with proper recording, correct asset classification, and up-to-date compliance, so your claims are prepared accurately and align with current ATO requirements.

Who is eligible for the $20,000 instant asset write-off in 2026?

Before you rush out and purchase assets, it is important to confirm that your business meets the eligibility requirements set by the Australian Taxation Office (ATO). Not all businesses qualify, and getting the details wrong could mean your deduction is rejected at tax time.

To qualify for the $20,000 Instant Asset Write-Off in 2025–26, your business must meet the following conditions:

• Your aggregated annual turnover is less than $10 million. This includes the turnover of any business entities affiliated with or connected to yours.
• You must elect to use the simplified depreciation rules for the 2025–26 income year. This is a key requirement. The IAWO is only available under these rules.
• The total cost of the asset must be less than $20,000. If you are registered for GST, this is the GST-exclusive price. If you are not registered for GST, the threshold includes GST.
• The asset must first be used or installed, ready for use, for a taxable business purpose between 1 July 2025 and 30 June 2026.
• The write-off applies to both new and second-hand assets. This provides you flexibility to purchase used equipment, machinery, or technology and still claim the full deduction immediately.

What does "Installed Ready for Use" actually mean?

This phrase is critically important and is one of the most common points of confusion for small business owners. Many assume that simply purchasing or ordering an asset before 30 June 2026 is enough to qualify. It is not.

The ATO requires that the asset must be first used or installed and ready for use by 30 June 2026. Purchasing an asset before 30 June is not sufficient. The asset must be operational by that date. If you order equipment on 25 June but it is delivered on 3 July, you cannot claim the write-off for the 2025–26 financial year.

This is especially relevant for businesses ordering machinery, specialised equipment, or technology with longer delivery or installation timeframes. Planning early ensures your purchases are ready for use well before the deadline.

What assets qualify for the $20,000 instant asset write-off?

This is the question most small business owners want answered. The good news is that a wide range of assets are eligible, provided each item costs less than $20,000, is used for business purposes, and is first used or installed ready for use before 30 June 2026. Here is a breakdown by category.

Tools, equipment & machinery

Tradespeople, construction businesses, hospitality operators, and manufacturers are among the groups that benefit most from this category. Eligible assets include:

• Tools and equipment used by tradies for day-to-day work
• Kitchen equipment and coffee machines for cafés and restaurants
• Computers, laptops, tablets and general office equipment
• Commercial refrigeration units used in hospitality or retail
• Salon and beauty equipment such as chairs, dryers and treatment devices
• Medical and dental equipment used in clinics
• Specialised machinery used in workshops or manufacturing

For example, a plumber purchasing a pipe inspection camera for $8,500, or a café owner upgrading to a commercial coffee machine for $15,000, can claim the full cost as an immediate deduction in their 2025–26 tax return, rather than spreading it over several years.

Technology & office equipment

This is one of the most accessible categories for office-based businesses, professional services firms, and sole traders. Eligible items include:

• Laptops
• Desktop computers
• Tablets
• Monitors
• Printers
• Scanners
• Point-of-sale (POS) systems
• Business-use mobile phones
• Server equipment
• Networking devices

Whether you are upgrading your accounting software infrastructure, replacing ageing computers, or setting up a cloud-based system, the write-off can significantly reduce the upfront cost.

Vehicles (With Conditions)

Vehicles can be claimed under the $20,000 instant asset write-off, but only if certain conditions are met.

There are two main types of vehicles.

• Cars are vehicles that carry less than 1 tonne and fewer than 9 passengers.
• Other vehicles include trucks, heavy utes over 1 tonne, vans, motorcycles, and vehicles designed to carry 9 or more passengers.

If you purchase a vehicle for $20,000 or less and use it for business, you can claim the cost immediately in the same financial year. However, this is only allowed if you are using the logbook method for cars or the actual cost method for other vehicles.

If you use the cents-per-kilometre method, you cannot claim the vehicle purchase separately because depreciation is already included in that method. If the vehicle costs more than $20,000, it is not eligible for the instant asset write-off. Instead, the cost must be claimed over time through depreciation.

If the vehicle is used for both business and personal purposes, you can only claim the business portion of the cost and expenses.

For cars designed to carry less than one tonne and fewer than 9 passengers, there is also a limit on how much you can claim. Even if you purchase a car for more than $69,674, you can only claim up to $69,674 for the 2025–26 financial year. Any amount above this limit cannot be claimed.

Furniture & fit-out items

Businesses setting up a new office, retail space, or studio can also take advantage of the write-off for individual furniture and fit-out items costing less than $20,000 each. This includes office desks, ergonomic chairs, shelving units, display cabinets, reception counters, and storage solutions.

What assets are NOT eligible for instant asset write-off?

While the scope of the IAWO is broad, there are important exclusions to be aware of. Claiming an ineligible asset could result in the ATO disallowing your deduction, so it pays to know what does not qualify.

• Assets costing $20,000 or more: Assets valued at $20,000 or more can continue to be placed into the small business pool and depreciated at 15% in the first income year and 30% each income year after that. They cannot be claimed under the instant write-off.
• Leased assets: If you lease an asset rather than purchasing it outright, it is not eligible. Assets that are leased, or expected to be leased out, for more than 50% of the time on a depreciating asset lease are excluded.
• Assets not used for business purposes: You can only claim the portion of the asset used for business. If you buy a $10,000 laptop but use it 20% of the time for personal use, your actual deduction will be $8,000. However, the entire cost of the asset must still be under the $20,000 threshold to qualify for the instant write-off in the first place.
• Building improvements and capital works: These fall under separate capital works depreciation rules and are excluded from the simplified depreciation framework.
• Assets excluded from simplified depreciation rules: Certain assets, including those previously allocated to a low-value pool, are excluded from the rules that underpin the IAWO.
• Capital Works: This includes buildings and structural improvements.
• Research and Development (R&D): Any assets used specifically in your R&D activities.
• Software Development Pools: Software that has been allocated to a software development pool (note that other general business software may still be eligible).
• Horticultural Plants: This includes items such as grapevines.

Instant asset write-off example (how much tax you save)

Understanding how this works helps you see the real value of the incentive. The Instant Asset Write-Off reduces your taxable income in the financial year you purchase the asset, which directly lowers the tax you need to pay. The asset is not free; you still have to spend money. The benefit is that the tax saving is realised immediately, rather than spread over several years through depreciation.

Before you purchase any asset, check this

Before committing to any purchase, it is important to run through a few key checks to ensure the asset qualifies and the deduction can be claimed correctly.

• Is the cost under $20,000 per asset?
  The full purchase price must be below the instant write-off threshold.
• Will the asset be ready for use before 30 June 2026?
  The asset must be installed and operational, not just purchased.
• Is the asset used for business purposes?
  Only the business-use portion can be claimed if there is any private use.
• Are you using simplified depreciation rules?
  This is required to access the instant asset write-off.
• Do you have proper documentation?
  Invoices, payment records, and usage details are essential to support your claim.

Common mistakes small businesses make with write-offs

Each year, many Australian small businesses miss out on valid deductions or have claims denied due to avoidable errors. Here are some of the most common mistakes when claiming the $20,000 Instant Asset Write-Off.

Leaving purchases too late
One of the biggest mistakes is waiting until May or June to act. Delivery delays, installation time, and supplier availability can push your asset beyond the deadline. Plan early and ensure assets are fully operational well before 30 June 2026.

Misunderstanding the threshold
The total cost of the asset must be under $20,000, not just the business-use portion. Even if your business use is below $20,000, the full purchase price must still meet the threshold.

Forgetting to apportion private use
If an asset is used for both personal and business purposes, you can only claim the business-use portion. Incorrect apportionment can raise issues during ATO reviews.

Not opting into simplified depreciation rules
To access the write-off, you must elect to use simplified depreciation rules on your tax return. Missing this step can make your claim ineligible.

Claiming ineligible assets
Leased assets, building improvements, and items mainly used for personal purposes do not qualify. Incorrect claims in these areas can lead to compliance issues and penalties.

What happens after 30 June 2026?

The $20,000 instant asset write-off is set to drop back to $1,000 from 1 July 2026, unless the government announces a further extension. This is a significant reduction and changes how deductions will be claimed going forward.

While industry groups have pushed for a permanent higher threshold, there is no confirmed update at this stage. As a result, businesses should plan based on the current rules rather than waiting for potential changes.

The key takeaway is timing. If you are considering upgrading equipment, investing in technology, or making other asset purchases, acting before 30 June 2026 allows you to maximise the available deduction. Delaying these decisions could mean losing access to the higher threshold and missing out on immediate tax benefits.

How does CleanSlate help you maximise your write-off?

Tax time is stressful enough without second-guessing whether your asset purchases actually qualify. We have seen too many small business owners either miss out on legitimate deductions because they were unsure of the rules, or worse, have claims flagged by the ATO because something was recorded incorrectly.

That is exactly why our clients come to us. Not because accounting is complicated, but because their time is better spent running their business rather than reading ATO legislation.

At CleanSlate, we work with business owners every day across industries like trades, hospitality, retail, and professional services. We know what the ATO looks for, we know what gets missed, and we know how to make sure you are claiming everything you are entitled to — nothing more, nothing less.

Beyond just asset write-offs, you can partner with our payroll team to ensure your staff are paid correctly while you focus on scaling your operations.

When it comes to the $20,000 Instant Asset Write-Off specifically, here is what our professional tax accounting support actually looks like in practice:

• We review your planned purchases and clearly tell you which qualify and which do not before you spend the money.
• We check whether your business is correctly set up under the simplified depreciation rules, so your claim holds up at tax time.
• We flag your business pool balance. If it is approaching $20,000, you may be able to write off the entire pool this financial year, which most business owners do not even realise is possible.
• We handle the paperwork, so the deduction is recorded correctly on your tax return the first time.

Whether you are already a CleanSlate client or you are looking for a fresh start with a tax accountant who actually gets small business, we would love to hear from you. With 30 June 2026 approaching faster than it seems, now is the right time for a quick conversation. Book your call today.

Final thought on $20,000 instant asset write-off

The $20,000 Instant Asset Write-Off will not be around forever. With 30 June 2026 approaching fast, now is the time to review your asset purchases, confirm your eligibility, and make sure you are claiming every deduction you are entitled to. Every dollar saved on tax is a dollar back in your business.

Whether you are buying new equipment, upgrading your technology, or refreshing your workspace, the right planning makes all the difference. A quick conversation with our tax accounting team could save you thousands before the deadline.