Instant asset write-off 2026–27: what the permanent $20,000 threshold means for timing

For years the instant asset write-off was a timing puzzle. The threshold was set one year at a time, sometimes confirmed late, and owners were left guessing whether to rush purchases before 30 June. That changed in 2026. Here’s what the permanent rule means for when you buy — and the one timing test that still catches people out.

What exactly changed in 2026?

The ATO’s legislation summary says the measure is now law and will “permanently increase the instant asset write-off for small businesses to $20,000” from 1 July 2026. Before that, the $20,000 figure had been extended year by year; the 2025–26 version covered assets first used or installed ready for use between 1 July 2025 and 30 June 2026.

In practical terms:

• You no longer need to worry about the threshold dropping after 30 June.
• There’s no reason to rush a purchase into June purely because of threshold uncertainty.
• Each financial year still has its own cut-off: 30 June.

Who can use it?

The write-off is part of the simplified depreciation rules for small business. You need:

Requirement	Detail
Aggregated turnover	Less than $10 million (including connected entities and affiliates)
Simplified depreciation	You must use the simplified depreciation rules for all your depreciating assets (with specific exclusions)
Asset cost	Less than $20,000 per asset, excluding GST if you’re registered
Timing	First used or installed ready for use in the income year you claim

The ATO also notes that if you choose simplified depreciation, you apply the whole set of rules, not just the parts you like. The “lock-out” rule for businesses that previously stopped using simplified depreciation is suspended until 30 June 2027.

Does the permanent threshold mean timing no longer matters?

No — it means timing matters for different reasons. The threshold is stable, but the income year in which you get the deduction still depends on when the asset is first used or installed ready for use. Buy on 25 June and have it installed on 2 July, and the deduction lands in the next financial year. For a business expecting a big tax bill this year, that difference is real cash.

We unpack this on installed ready for use by 30 June and in the decision guide buy in June or July?.

What about assets over $20,000?

Assets costing $20,000 or more go into the small business simplified depreciation pool. The ATO sets the pool deduction at 15% in the year an asset is added and 30% each year after. If the pool balance at the end of the year (before that year’s deduction) is below the instant asset write-off threshold, you can write off the whole balance.

That makes the split between “under $20,000” and “$20,000 or more” worth thinking about when you plan purchases. Two separate eligible assets under the limit are treated very differently from one bundled asset over it — but the assets have to be genuinely separate, not an artificial split. Your accountant will confirm what counts.

Illustrative example: three items, one EOFY

Illustrative only — invented figures, general tax treatment as described by the ATO.

A physiotherapy clinic with turnover of $1.8 million plans three purchases: a treatment table ($6,800), a shockwave unit ($17,900) and a reformer studio package ($42,000), all prices excluding GST.

• The table and shockwave unit each cost under $20,000, so each can be written off in full in the year it’s first used or installed ready for use.
• The reformer package is over the threshold, so it goes into the pool at 15% in year one and 30% after that.

If all three are delivered and set up by 30 June, the two smaller items are deducted this financial year. If the shockwave unit is back-ordered until mid-July, its deduction moves to the next year. The clinic still needs the cash or finance to pay for all three — the write-off reduces tax, not the price.

Planning a batch of purchases like this? See what your business could access for the upfront cost.

What are the common traps?

• Invoice date isn’t the test. First used or installed ready for use is.
• GST confusion. Registered businesses use the GST-exclusive cost.
• Private use. Only the business-use portion is deductible, but the whole cost must be under the limit.
• Buying for the deduction alone. A deduction saves tax at your rate. See buying just to save tax.
• Forgetting cash flow. The deduction arrives when you lodge; the bill arrives now. That gap is exactly where EOFY equipment finance comes in.

How should I plan purchases now the threshold is permanent?

A permanent threshold changes the rhythm of planning from “rush before it changes” to “buy when it suits”. A sensible approach:

• Keep a rolling list of equipment you’ll need over the next 12 months, with estimated costs excluding GST.
• Note which items fall under $20,000 and which will go into the pool.
• Decide the income year with your accountant, based on profit, not panic.
• Book delivery and installation with enough buffer if you’re aiming for 30 June.
• Arrange funding early so payment doesn’t delay dispatch.

This takes most of the drama out of June. Our EOFY 2027 countdown turns the list into a month-by-month plan.

Ready to plan this year’s purchases?

With the threshold settled, the real questions are what you need, when it can be in service, and how you’ll pay for it without draining working capital. A 60-second enquiry gets a specialist working on the last part. There’s no credit check to enquire, and your details go to one team, not a room full of lenders. Please be accurate about the equipment, the cost and your timing so we can line up the right option first time.