$20,000 Instant Asset Write-off for 2025/26

Following the recent passage of legislation extending the instant asset write-off (‘IAWO’) to 30 June 2026, the ATO is reminding taxpayers that, if their business has an aggregated annual turnover of less than $10 million, they may be able to use the IAWO to immediately deduct the business portion of the cost of eligible assets which cost less than $20,000. Eligible assets must have been first used or installed ready for use for a taxable purpose between 1 July 2025 and 30 June 2026. The ‘less than $20,000’ limit applies on a per asset basis, so taxpayers can instantly write-off multiple assets. If an eligible small business has previously claimed a deduction for an asset’s cost under the simplified depreciation rules in an earlier income year, they can also immediately deduct the first improvement cost for that asset. This applies as long as the improvement cost was incurred between 1 July 2025 and 30 June 2026 and is less than the $20,000 limit. The IAWO can be used for both new and second-hand assets (but some exclusions and limits apply). It is only available to eligible small businesses that use the simplified depreciation rules. Assets costing $20,000 or more can continue to be placed into the general small business pool and depreciated at 15% in the first income year and 30% each following income year. The usual rules for claiming deductions still apply, and taxpayers must have records to prove their claim.