The $20K Immediate Asset Write-Off – What Small Businesses Need to Know for 2025–26 Financial

Over the past few years, one of the most confusing aspects for small business entities (and there are many!) is what the applicable limit for the immediate tax write-off for depreciable assets is?  

The rules have changed more than Tassie’s Spring weather and eligibility has been dependent on both turnover and asset value. Asset value’s have ranged from $1,000 to $30,000, up to unlimited (Covid years), then down to $20,000 over the past few years. What is it now?  

Well, it had dropped to only $1,000 for this 25/26 financial year, before the Australian Government just extended the immediate asset write off threshold to be $20,000 (excluding GST) for the 2025–26 financial year.  

This allows eligible small businesses to immediately deduct the full cost of qualifying assets costing less than $20,000 (excluding GST). This measure was originally announced on 4 April 2025 and has now passed through the Lower House and the Senate as Law. 

Eligibility and Key Details 

• Applies to small businesses with an annual turnover of less than $10 million. 

• The $20,000 threshold applies on a per asset basis, allowing multiple assets to be written off if each is below the limit. 

• Assets must be first used or installed ready for use between 1 July 2025 and 30 June 2026. 

• Both new and second-hand assets are eligible, including equipment, vehicles (subject to car limits), tools, and office furniture. 

• Assets costing $20,000 or more can be added to the small business depreciation pool and depreciated at 15% in the first year, and 30% in subsequent years. 

A couple of examples (taken from the ATO’s explanatory memorandum):  

Example 1 – Asset Below the Threshold: 

Douglas, who runs a small graphic design studio, purchases a new office printer on 15 August 2025 for $3,500. As the printer is used entirely for business purposes and costs less than $20,000, Douglas can immediately deduct the full amount in his 2025–26 tax return. 

Example 2 – Asset Above the Threshold 

Marg buys a delivery van for $45,000, which she uses 60% of the time for business. Since the total cost exceeds the $20,000 threshold, she cannot claim an immediate deduction. Instead, the business-use portion ($27,000) is added to her small business depreciation pool. She can claim 15% of this amount ($4,050) as a deduction in the 2025–26 financial year, with 30% deductions in subsequent years. 

Conclusion 

This extension of the instant asset write-off provides a valuable opportunity for small businesses to invest in assets that support their operations while benefiting from immediate tax deductions. Businesses are encouraged to consult with the WLF Accounting & Advisory team to ensure eligibility.