For the 2025–26 financial year, the instant asset write-off threshold for eligible small businesses in Australia is $20,000 per asset, allowing businesses with an aggregated annual turnover of less than $10 million to immediately deduct the cost of qualifying depreciable assets (see ato.gov.au – instant asset write-off). A registered tax agent or best accountants in Sydney can help you confirm eligibility and maximise your deductions before the 30 June 2026 deadline.
What is the instant asset write-off and how does it work in 2026?
The instant asset write-off (IAWO) is a tax incentive that allows eligible Australian businesses to claim an immediate deduction for the full cost of a depreciable asset in the income year it is first used or installed ready for use. Rather than depreciating the asset's value gradually over several years, the entire cost is deducted upfront – reducing your taxable income in the same financial year.
In practical terms, if your small business purchases a $15,000 piece of equipment in the 2025–26 income year, you can claim the full $15,000 as a deduction in your 2026 tax return, provided the asset and your business meet eligibility criteria.
It is important to note that the instant asset write-off is not a cash refund – it reduces your taxable income, which in turn reduces the tax you owe. The actual cash benefit depends on your applicable tax rate. For small businesses taxed at the 25% base rate, a $20,000 write-off translates to a tax saving of $5,000.
The instant asset write-off is consistently one of the most-used small business concessions; the ATO publishes annual taxation statistics and current-year guidance on its take-up.
What are the thresholds and eligibility rules for 2025–26?
For the 2025–26 financial year (ending 30 June 2026), the key parameters are:
- Threshold: $20,000 per asset (excluding GST if you are registered for GST; including GST if you are not) - Turnover cap: Aggregated annual turnover of less than $10 million (see ato.gov.au – instant asset write-off) - Asset type: The asset must be a depreciable business asset used or installed ready for use between 1 July 2025 and 30 June 2026
Assets that cost $20,000 or more cannot be claimed under the IAWO and must instead be placed into the small business simplified depreciation pool. There is no cap on how many individual assets you can write off – each one just needs to fall under the $20,000 threshold individually.
Certain assets are excluded from the scheme regardless of cost. These include: - Horticultural plants - Buildings and structural improvements (which follow separate Capital Works rules) - Assets allocated to a low-value pool or software development pool - Assets leased to other parties
The ATO recommends keeping records of purchase invoices, asset use logs, and installation dates to substantiate any IAWO claims in the event of an audit.
Which businesses are eligible in 2026?
Eligibility hinges primarily on your aggregated annual turnover – a figure that includes not only your own business's turnover but also the turnover of any connected or affiliated entities. The ATO's connected entity and affiliate tests can be complex, particularly for businesses operating through trusts, family partnerships, or interrelated companies.
Eligible business structures include: - Sole traders - Partnerships - Companies - Trusts
You do not need to be a small business entity for every concession – only for the IAWO. However, if your aggregated turnover approaches the $10 million threshold, it is worth having an accountant calculate your position carefully. Small businesses with fewer than 20 employees make up the large majority of Australian businesses – see ABS Counts of Australian Businesses for current data – so the IAWO is potentially within scope for most operators.
Instant asset write-off vs. alternative depreciation methods: a comparison
Not every asset or business situation suits the IAWO. Here is how the main depreciation options compare for the 2025–26 year:
| Method | Eligibility | Asset Cost Limit | Tax Benefit Timing | Typical Accounting Cost (AUD, 2026) | |---|---|---|---|---| | Instant Asset Write-Off | Turnover < $10M | Up to $19,999 per asset | Immediate (year of purchase) | $300–$600 per claim (added to annual return) | | Small Business Pool (15%/30%) | Turnover < $10M | $20,000+ per asset | Spread over multiple years | $500–$900 annually for pool management | | Standard Diminishing Value | All businesses | No limit | Spread over asset life | $800–$1,500+ depending on complexity |Prices above reflect typical additional fees charged by Australian accountants for managing each method as part of a broader tax engagement. For a full breakdown of professional fees, see our cost guide.
Choosing between these methods requires an understanding of your cash flow needs, your expected income in future years, and whether you anticipate a loss year where immediate deductions provide less benefit. A qualified tax accountant can model these scenarios for your specific circumstances.
How to claim the instant asset write-off in your 2026 tax return
Claiming the IAWO is relatively straightforward once you have confirmed eligibility:
1. Confirm your aggregated turnover is under $10 million 2. Check that each asset is used or installed ready for use before 30 June 2026 3. Verify the cost of each asset is below $20,000 (exc. GST if GST-registered) 4. Record the asset in your depreciation schedule 5. Lodge your return – sole traders via myTax; companies, trusts, and partnerships via a registered tax agent
Most small business owners work with a registered BAS or tax agent to prepare their schedules correctly, particularly if they have multiple assets, mixed-use assets (personal and business), or assets purchased near the financial year end. Our methodology outlines how we evaluate and rank accounting professionals for business tax needs.
Common mistakes to avoid when claiming in 2026
Misidentifying the asset cost: If you are not GST-registered, you must include GST in the asset's cost when testing against the $20,000 threshold. A $19,500 asset with $1,950 GST actually costs $21,450 – placing it above the threshold. Claiming assets not yet in use: The asset must be used or installed ready for use by 30 June 2026, not merely ordered or deposited on. Ignoring private use: If you use a business asset for personal purposes (such as a vehicle), you can only claim the business-use proportion. A car used 60% for business yields a deduction of 60% of the eligible cost. Assuming the threshold is permanent: The IAWO threshold has changed multiple times – it was temporarily $150,000 during COVID-19 stimulus. Always confirm the current threshold with an accountant before making purchasing decisions.---
Frequently asked questions
Q: Can I claim multiple assets under the instant asset write-off in 2026? Yes. There is no limit to the number of assets you can claim, provided each individual asset costs less than $20,000 (excluding GST if applicable) and is used or installed ready for use before 30 June 2026. Q: Does the $20,000 threshold apply to the GST-inclusive or GST-exclusive price? It depends on your GST registration status. If your business is registered for GST, use the GST-exclusive price. If you are not registered for GST, use the GST-inclusive (total) price when comparing against the $20,000 limit. Q: What happens if my asset costs exactly $20,000? Assets costing exactly $20,000 (at the relevant GST treatment) do not qualify for the instant asset write-off. The threshold is assets costing *less than* $20,000. Assets at or above this amount must be depreciated through the small business simplified depreciation pool or standard depreciation methods. Q: Is the instant asset write-off the same as the temporary full expensing measure? No. The temporary full expensing (TFE) measure, which ended on 30 June 2023, was a separate COVID-era concession with much wider eligibility. The 2025–26 IAWO is an ongoing measure with a $20,000 per-asset threshold and a $10 million aggregated-turnover cap – see ato.gov.au – temporary full expensing.---
Sources
- ATO – Instant asset write-off for eligible businesses: ato.gov.au – instant asset write-off - ATO – Simpler depreciation for small business: ato.gov.au – simpler depreciation - ABS – Counts of Australian Businesses: abs.gov.au – counts of Australian businesses - Income Tax Assessment Act 1997, Subdivision 328-D (simpler depreciation for small business) - Tax Practitioners Board public register: tpb.gov.au/public-register
Information in this article is general and current as at 19 May 2026. The instant asset write-off threshold and turnover cap are reviewed by Government from year to year – verify the current settings with a TPB-registered tax agent or the linked ATO page before acting.
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