SBE Instant Asset Write-off

The Australian Government has confirmed that the $20,000 Instant Asset Write-Off (IAWO) for eligible small businesses will remain in place until 30 June 2026. This brings welcome certainty for business owners, giving them time to plan asset purchases and manage tax outcomes well before year‑end.

For the year ending 30 June 2026

• The IAWO threshold of $20,000 per asset continues.
• Assets must be first used or installed ready for use before 30 June 2026 to be eligible in the current financial year.

What happens after 30 June 2026?

• Once this extension ends at 30 June 2026, the instant deduction limit will revert to $1,000, unless further extensions are agreed in parliament.

Who Qualifies?

• SBE Entities: Businesses with aggregated turnover under$10 million and have adopted the simplified depreciation rules.

What Assets Are Eligible?

Under the IAWO scheme, most plant, equipment, tools, and commercial vehicles (including both new and second-hand assets) are eligible provided they fall within the prescribed business use rules and costs.
Additions, upgrades or extended warranties can also be deducted immediately if they are the first such addition after the initial write-off, and are under $20,000.

Each asset purchased is subject to the $20,000 limit, allowing small businesses to apply the IAWO limit on more than one item.

Assets equal to or exceeding $20,000

‍These must go into the small business general depreciation pool, with a 15% deduction in the first year and 30% each year thereafter

Excluded assets

• Capital improvements such as building extensions
• Research & Development-specific expenditures
• Assets with mixed private and business use beyond allowable limits

Sale treatment

When a Small Business Entity (SBE) sells an asset that was previously claimed under the Instant Asset Write-Off the sales proceeds are included in assessable income in the year of sale.

Non-SBE businesses

Non-SBEs with turnover of $10 million or more remain ineligible for this scheme and will continue to use the general depreciation rules.

Why It Matters to Small Business Owners

• Improves cash flow: Write-offs reduce taxable income in the year of purchase, offering immediate tax relief.
• Reduces complexity: The per-asset approach simplifies record-keeping compared to ongoing depreciation.
• Boosts investment: This is the Government’s mechanism to help boost investment. It also enables business owners to invest in essential assets.

Final Take

The early extension of the $20,000 Instant Asset Write-Off, more than six-months earlier than in previous years, gives greater clarity and confidence, and allows us to help you make informed decisions for tax planning heading into the second half of the financial year.

If you’d like help determining whether a purchase qualifies or how to best use the write‑off, please reach out to the team.