Instant Asset Write-Off Extended Until 30 June 2026: What Small Businesses Need to Know
Great news for small businesses! The Federal Government has extended the $20,000 Instant Asset Write-Off (IAWO) provision until 30 June 2026, following the passage of legislation through Parliament in December 2025. This measure is designed to continue to provide tax relief and boost cash flow for millions of small businesses across the country.
What Is the Instant Asset Write-Off?
The Instant Asset Write-Off has been in place for multiple years and allows small businesses to immediately deduct the full cost of eligible depreciating assets rather than depreciating them over the course several years. This means you can claim the entire expense in the financial year that it was purchased, reducing your taxable income and minimising your tax payable.
Key Points of Instant Asset Write Off
Threshold: Assets costing less than $20,000 (excluding GST if registered) qualify. Assets costing greater than $20,000 will need to be depreciated over multiple years)
Eligibility: Small Businesses with an aggregated turnover (income before expenses) of less than $10 million.
Timing: Assets must be first used or installed ready for use by 30 June 2026 to be eligible.
Per-Asset Basis: The $20,000 limit applies per asset, so you can write off multiple purchases under the threshold.
What About Assets Over $20,000?
Assets costing $20,000 or more can still be added to the small business depreciation pool and depreciated at standard rates (15% in the first year, 30% thereafter).
Why This Matters
This extension provides a significant cash flow advantage, enabling businesses to invest in equipment, technology, and other essentials without waiting years to claim depreciation. This will not result in a larger claim, but it allows you to get the full benefit immediately. For example:
Maria owns and operates a small café as a sole-trader and has an aggregated turnover under $10 million. She purchases a new coffee machine for $10,000 (excluding GST) in March 2026. Her marginal tax rate is 39% (2026 rate for people earning between $135,001-$190,000).
When Maria lodges her tax return, she will be able to claim the full $10,000 immediately. This will mean that she will get $3,900 back on her income tax ($10,000 * 39%) in the year that she purchased it.
If Maria instead had to depreciate the coffee machine using the small business general pool, she would only be able to claim $1,500 immediately. This would mean that she will get $585 back on her income tax ($1,500 * 39%) in the year that she purchased it.
Planning Tips
Ensure assets are delivered and installed before 30 June 2026 to be able to claim
Keep accurate records and invoices for all purchases.
Consider speaking with your tax adviser to maximise benefits and plan for larger investments.
The information provided above is general in nature and does not take into account your specific circumstances, objectives, or financial situation. It should not be relied upon as tax, legal, or financial advice. Before acting on any information, you should consider seeking advice from a qualified professional who understands your individual circumstances.
