The instant asset write-off in 2026-27 (now permanent)
Small businesses can write off eligible assets under $20,000 immediately — and as of the 2026-27 Budget, that $20,000 threshold is now a permanent feature. Here is what you can claim.
If you run a small business, the instant asset write-off is one of the simplest tax breaks to use — and one of the most valuable when you are buying equipment or a work vehicle. But the amount you can write off is changing, and the timing of your purchase matters more than usual right now.
What the instant asset write-off does
Normally, when a business buys an asset, it deducts the cost gradually over several years through depreciation. The instant asset write-off (IAWO) lets an eligible small business deduct the full cost of an eligible asset in the year it is first used or installed ready for use — bringing the whole deduction forward.
The 2026-27 threshold
For 2026-27, small businesses with an aggregated turnover under $10 million can immediately write off eligible assets costing less than $20,000, provided they are installed ready for use between 1 July 2025 and 30 June 2026. The threshold applies per asset, so you can write off several assets that are each under $20,000.
Now permanent — the annual cliff is gone
For years the write-off was a temporary measure, renewed budget by budget, and the threshold was legislated to fall back to just $1,000 once each extension lapsed. The 2026-27 Federal Budget changed that: the government made the $20,000 threshold a permanent feature from 1 July 2026, ending the yearly guessing game about whether it would survive. You no longer have to race an expiry date — though bringing an eligible purchase forward still pulls the deduction into the current year.
Cars have their own limit
For passenger vehicles, the deduction is capped by the car cost limit of $69,883 (2026-27), and you can only claim the business-use portion. A car used 70% for business, for example, gives you 70% of the (capped) cost as a deduction.
What does not qualify
A key one: leased assets cannot use the IAWO, because you do not own them. Assets that cost more than the threshold do not miss out entirely — they go into the small-business depreciation pool and are written off at 15% in the first year and 30% each year after. If you are registered for GST, the threshold applies to the GST-exclusive cost.
Compare ways to fund a work vehicle
Our business vehicle calculator weighs a chattel mortgage, a lease and paying cash — including depreciation and the write-off — for 2026-27.
Business tax has plenty of nuance — eligibility, timing and the business-use split all depend on your circumstances, and your accountant can confirm what applies to your situation before you commit to a purchase.