The Instant Asset Write-Off Win You Might Be Overlooking

A few weeks ago, I sat down with one of my clients, a photographer. Talented, booked out months ahead, but struggling with late night edits because their computer was on the fritz. The first thing they share is “Luce, I need an upgrade, but every time I look at the price, I think, maybe next year.”

If you’ve ever run a business on your own, you may know the feeling.

And honestly, it's a perfect moment to talk about the Instant Asset Write-Off, because it may just make some decisions a whole lot easier.

So what is it?

Right now, for the 2025/26 financial year, eligible small businesses (including sole traders) with turnover below $10 million can immediately deduct the business portion of assets costing less than $20,000, provided the asset is first used or installed ready for use by 30 June 2026.

This is currently law until 30 June 2026 (unless the government extends it further, which, as we know, is currently assessed year by year).

A few key points:

• The $20,000 threshold is per asset.

• You can claim multiple assets, as long as each one is under the threshold.

• The asset must be first used or installed ready for use by 30 June 2026.

• Both new and second-hand assets may qualify.

• You can only claim the business-use percentage (meaning if you use it for personal use you can only claim the business portion).

It’s one of those rare policies that can help with small business cash flow. Traditionally assets must be depreciated over their life cycle, stretched over years. An immediate deduction gives a much greater benefit. It helps

• offset the cost of upgrades in the current financial year

• reduce taxable income immediately

• improve cash flow

• invest in equipment that actually supports your quality of work and wellbeing

Let's explore some actual examples...

Our photographers new editing setup

Looking to invest in a new computer, monitor and backup storage, the total cost comes to $5,400 and it's used 100% for business.

Because each item is under $20,000, the full deduction can be claimed this year, instead of depreciating over several years.

The result?

Reduced taxable income, faster editing time, and far less stress.

The local tradie replacing ageing tools

A tradie upgrades their equipment:

• a second-hand compressor ($3,800)

• upgraded power tools ($2,900)

• a new laser level ($1,400)

Each item is under the threshold, and as such each can be instantly written off this financial year.

More efficient gear, faster job turnaround and the tax bill can be reduced. Win.

A virtual assistant setting up their home office

Starting their business, a virtual assistant looks to set up their home office with a desk, chair, monitor, laptop and lighting.

All separate assets, all are individually valued under $20,000, and if all are used solely for the new business, can be immediately deductible (if used for personal purposes however, we need to establish what the right portion is, and only claim the business percentage).

Now our virtual assistant is more comfortable, more productive, and more profitable.

But what if something costs over $20,000?

Great question!

If a single asset costs more than $20,000, it does not qualify for the instant asset write-off.

Instead, will be depreciated over time (depending on the assets life span). It's still deductible over time, just not instantly.

This is why planning before you buy should be a really important consideration.

If you are considering to purchase, start with the ATO's guidance on the instant asset write-off and review:

• the cost of each asset

• your business turnover

• whether you use the simplified depreciation rules

• whether it will be ready for use by 30 June 2026

• the business-use percentage (especially for laptops, phones, vehicles)

The rules seem simple, but given there are a few considerations, don't get trapped up.

One more reminder!

The instant asset write off is only legislated until 30 June 2026.

There is no guarantee it will continue beyond then.

Every year it is reassessed, debated and adjusted, meaning eligibility, thresholds and availability can change. So if are considering upgrades, don't assume the rule will always be around.

Unsure what this means for you? Let's chat!

Better yet book in a Year-End Finance Reset with me.

Together we'll review your numbers, reconcile what matters, understand your obligations and help you step confidently into 2026 with clarity and control!

This blog provides general information only and does not take into account your specific circumstances. It is not financial, tax or legal advice. Before making any decisions, please seek personalised advice from a qualified professional.