Instant Asset Write-Off: $20,000 Now Permanent for Small Business

The $20,000 instant asset write-off looks set to stop being an annual guessing game for small business owners. The 2026-27 Budget, handed down on 12 May 2026, announced a permanent $20,000 threshold from 1 July 2026, and the bill that delivers on that promise has now passed both houses of Parliament. Once it receives Royal Assent, there is no expiry date built into the design this time. For businesses used to watching the calendar for the next extension, that is a real change in how the concession works, not just a bigger number.

What the Budget promised, and what still has to happen

The 2026-27 Budget confirmed the government would permanently increase the instant asset write-off for small business to $20,000, applying to assets first used or installed ready for use from 1 July 2026.

The enabling legislation, the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, passed the House of Representatives on 18 August 2026 and the Senate the following day, without amendment.

As at the time of writing, the bill was still awaiting Royal Assent, the final formal step before a bill becomes an Act. That step is usually a formality once both houses have passed a bill unamended, but the threshold is not yet settled law, so it is worth checking the current status before relying on it for a specific purchase.

Who qualifies

The permanent threshold is available to small business entities, meaning businesses with an aggregated turnover below $10 million. That is unchanged from the turnover test that has applied under each of the recent annual extensions.

• Aggregated turnover under $10 million, including any connected or affiliated entities.
• The asset must be a depreciating asset used, or installed ready for use, for a taxable purpose.
• Both new and second-hand assets qualify, provided the cost is below the $20,000 threshold.
• The asset must be first used or installed ready for use from 1 July 2026 to fall under the permanent arrangements.

The threshold applies per asset, not per year

The $20,000 limit is applied separately to each eligible asset rather than as a single annual cap. A business can claim an immediate deduction for as many assets as it buys during the year, provided each one individually costs less than $20,000.

Assets that cost $20,000 or more are not excluded altogether. They are added to the small business simplified depreciation pool and depreciated at 15% in the first income year, then 30% in each income year after that, rather than deducted in full immediately.

Why permanent status changes how you plan

Since 2015, the instant asset write-off has been extended, adjusted or reintroduced by nearly every Budget, sometimes with the enabling legislation passing only weeks before the end of the financial year it applied to. Businesses timing an equipment purchase around the concession have had to do so without knowing for certain whether the threshold would still exist, or at what level, the following year.

Outside of these temporary increases, the underlying instant asset write-off threshold set out in the tax law is $1,000, so an extension lapsing has never meant losing the concession entirely, but it has meant a sharp drop to a level that covers very little business equipment.

A permanent $20,000 threshold, once assented, removes that annual uncertainty. It lets a business plan capital purchases across financial years on their own merits, rather than rushing to buy before 30 June out of concern the concession might shrink or disappear.

What to check before you buy

The mechanics of the deduction have not changed, only its permanence, so the usual planning questions still apply to any purchase.

• Confirm the asset will genuinely be first used, or installed ready for use, by the relevant date, not just ordered or invoiced.
• Keep the records the ATO expects to support the claim, including the business-use proportion of any asset with some private use.
• Check your aggregated turnover against the $10 million threshold, including any connected or affiliated entities.
• Weigh the timing of larger purchases against your overall tax position and cash flow, not the write-off alone.

Removing the annual deadline pressure is also a reasonable prompt to revisit your broader capital expenditure plans rather than react to them each June. Our business services team can help you work through what the permanent threshold means for a specific purchase or investment plan.

Talk to us before you commit to a purchase

A permanent instant asset write-off is a welcome simplification, but "permanent" still depends on the bill completing its final step into law, and the usual eligibility tests still need to be met for each purchase. We are not able to advise on your individual circumstances in an article like this one.

We can talk through what the change means for your business and its purchasing plans. Get in touch before you commit to a purchase, particularly this early in the new financial year.

Disclaimer: This article contains general information only and does not constitute financial, legal or tax advice. It has been prepared without regard to your objectives, financial situation or needs. Tax and superannuation laws change frequently, and the information in this article may not reflect the current law or may become inaccurate over time. Before acting on anything in this article, you should consider its appropriateness to your circumstances and seek advice from a registered tax agent or qualified adviser.