The Australian government has officially extended the $20,000 instant asset write-off for small businesses, offering millions of owners immediate tax support.
The move, passed by the Senate, is set to benefit more than 4 million small businesses in the 2025–26 financial year.
Extension Of The $20,000 Instant Asset Write-Off
Laws approved by the Senate will continue the elevated write-off threshold until June 30, 2026.
Under this policy, small businesses with an annual turnover below $10 million can instantly deduct the full cost of assets priced under $20,000, instead of depreciating them over several years.
Government representatives, including Assistant Minister for Productivity Andrew Leigh, highlighted that this measure will strengthen cash flow and encourage investment in new tools, machinery, and technology.
“Up to 4.1 million small businesses with turnover under $10 million a year will benefit,” Leigh said in a joint statement with Treasurer Jim Chalmers and Small Business Minister Anne Aly.
Multiple Claims Allowed Under The Scheme
One major advantage of the write-off is its per-asset basis, meaning businesses can claim multiple items under the $20,000 limit.
Examples include:
- Tradies purchasing new tools
- Cafés upgrading their kitchen equipment or coffee machines
- Businesses investing in computers, tablets, or digital systems
Previously, the write-off threshold was just $1,000, but year-to-year extensions have kept it at $20,000 across recent financial years.
Push For Permanent Reform
While industry groups welcome this extension, many argue that the policy should become a permanent feature of the tax system.
COSBOA’s Call For Higher, Permanent Thresholds
The Council of Small Business Organisations Australia (COSBOA) said that yearly extensions create uncertainty and hinder long-term planning. They also proposed lifting the threshold to $150,000 to support meaningful investment in equipment, vehicles, and technology.
COSBOA Chair Matthew Addison noted that the current limit is too low to support significant upgrades, saying small businesses need a threshold that enables real productivity growth.
Concerns About Yearly Uncertainty
Chartered Accountants Australia and New Zealand tax leader Susan Franks added that constant last-minute changes since 2015 have created “unnecessary uncertainty” for small operators.
She emphasised that a permanent write-off would reduce administrative burden and enable better planning. The policy also simplifies accounting by avoiding complicated depreciation calculations for assets under $20,000.
Amendment For Higher Threshold Rejected
Independent Tasmanian Senator Tammy Tyrrell attempted to boost the threshold to $30,000 and extend the program to 2030, but her amendment was not approved.
The current extension of the $20,000 write-off aligns with key Labor election promises.
The extension of the ATO’s $20,000 instant asset write-off to June 30, 2026 delivers immediate tax relief and improved cash flow for millions of Australian small businesses.
While many industry groups support the change, they continue to push for a permanent and higher threshold to provide long-term certainty and encourage genuine business investment.
As it stands, the policy remains a valuable tool for businesses looking to upgrade equipment, adopt new technology, and strengthen productivity ahead of tax time.
FAQs
Who qualifies for the $20,000 instant asset write-off?
Small businesses with annual turnover below $10 million can instantly deduct eligible assets costing under $20,000.
Can businesses claim more than one asset under this scheme?
Yes. The write-off applies per asset, meaning multiple purchases under the threshold can be claimed.
How long is the write-off available?
The extension runs until June 30, 2026, covering the entire 2025–26 financial year.