$20,000 Instant Asset Write-Off: What to Claim Before June 30

The $20,000 instant asset write-off is one of the most valuable tax deductions available to Australian small businesses — and the current threshold is set to expire on 30 June 2026. For Melbourne business owners, that means four days to act. Here's everything you need to know to claim before the deadline.

What Is the $20,000 Instant Asset Write-Off?

The instant asset write-off lets small businesses with an aggregated annual turnover under $10 million immediately deduct the full cost of eligible assets — up to $20,000 per asset — in the year they're first used or installed ready for use. Instead of depreciating an asset over several years, you claim the entire deduction upfront.

The limit is per asset, not cumulative. Buy three pieces of equipment at $18,000 each? That's $54,000 in immediate deductions — as long as each individual item is under the $20,000 threshold.

Why Is June 30 2026 the Deadline?

Under current law, the $20,000 threshold expires on 30 June 2026. From 1 July, it reverts to just $1,000 per asset.

The 2026–27 Federal Budget announced that the $20,000 threshold will become permanent — but this measure has not yet passed Parliament. Until the legislation is enacted, small businesses cannot rely on it. If you have a purchase you want to write off with certainty under existing law, the window closes on June 30.

Who Can Claim the Instant Asset Write-Off?

To claim the instant asset write-off for 2025–26, your business must:

• Have an aggregated annual turnover under $10 million — this includes turnover from any connected or affiliated entities, not just your own
• Have elected to use the simplified depreciation rules for the income year
• Be using the asset for a taxable business purpose

Sole traders, partnerships, companies and trusts can all claim — provided they meet the turnover and election requirements.

What Assets Qualify for the Write-Off?

Both new and second-hand assets are eligible, including:

• Tools and equipment
• Office furniture and technology
• Vehicles (subject to the car limit — see below)
• Manufacturing or construction machinery
• Software and point-of-sale systems

The critical requirement: the asset must be physically installed and ready for use by 30 June 2026. Ordering or paying before June 30 is not enough. If it's delivered on 3 July, it doesn't qualify for this financial year — regardless of when you paid for it.

Can You Write Off a Car?

Cars are eligible for the instant asset write-off, but they're subject to the car depreciation limit. For 2025–26, that limit is $69,674. Even if you write off a car under the instant asset write-off, your deduction is capped at this amount — any cost above the limit is not deductible.

The maximum GST credit you can claim on a car purchase is $6,334 (one-eleventh of the car limit).

One more detail: for GST-registered businesses, the $20,000 threshold is based on the GST-exclusive price. A vehicle invoiced at $21,000 including GST has a GST-exclusive cost of $19,091 — which is under the threshold and qualifies.

5 Common Mistakes That Cost Small Businesses Their Claim

1. Asset not installed by June 30. This is the most common error. Confirm delivery and installation dates in writing with your supplier — the invoice date is irrelevant.
2. Miscalculating the GST-exclusive cost. If you're GST-registered, the $20,000 threshold applies to the ex-GST price. A $22,001 invoice means the ex-GST cost is $20,001 — just over the limit.
3. Forgetting aggregated turnover. Your entity's turnover plus connected entities. A $9M business affiliated with a $2M entity has $11M aggregated turnover — which exceeds the $10M cap.
4. Not apportioning private use. Only the business-use percentage is deductible. A $16,000 asset used 50% for business means an $8,000 deduction — not $16,000.
5. Not electing simplified depreciation. The instant asset write-off only applies if you've elected to use the simplified depreciation rules. You can't cherry-pick assets without making the election.

How Do You Claim the Instant Asset Write-Off?

The instant asset write-off is claimed in the Business and Professional Items schedule of your income tax return for the year the asset was first used or installed ready for use. There's no separate application — it flows through as a depreciation deduction under the simplified rules.

If you're GST-registered, claim the GST credit on your BAS as normal in the period of purchase. The income tax deduction is then calculated on the GST-exclusive cost.

Records to keep for five years:

• Tax invoice showing asset cost, supplier details, and purchase date
• Evidence of when the asset was first used or installed ready for use
• Records showing the business-use percentage (if the asset has mixed use)
• Bank statements or payment records confirming the purchase period

Don't Leave Money on the Table

With four days until the deadline, now is the time to review whether any planned purchases can be brought forward. Even if the $20,000 threshold is made permanent later this year, claiming under existing law removes the uncertainty entirely.

If you're unsure whether an asset qualifies, how to calculate your aggregated turnover, or how to handle mixed-use apportionment — get in touch with our team before June 30. Our business tax preparation team will make sure you're claiming everything you're entitled to.