The federal government has extended the $20,000 instant asset write-off until the end of the financial year 2026.
The Albanese government has confirmed that the $20,000 instant asset write-off will be extended for this financial year, after passing legislation last week that extends the tax write-off until 30 June 2026.
The instant asset write-off allows small businesses (those with an aggregated annual turnover of less than $10 million) to immediately deduct the full cost of eligible depreciating assets.
While the ongoing legislated threshold is $1,000, the threshold has been higher than this in recent years. Since June 2023, the threshold has been for assets costing less than $20,000 (it has been inflated to $150,000 during COVID-19).
The extension of the $20,000 instant asset write-off was one of the Labor Party’s 2025 election campaign promises.
Legislation to extend the threshold was formally passed on 27 November. This formalises the fact that businesses can instantly write off assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose between 1 July 2025 and 30 June 2026.
The threshold applies per asset, which means small businesses can claim multiple purchases. This could include new tools for tradies; computers, tablets, and office equipment for office-based companies; and kitchen equipment and coffee machines for cafes.
For example, if a small florist purchased a new flower display fridge on 2 December 2025 for $4,000 – and it was to be used entirely for business purposes – the full cost of the fridge can be immediately deducted and claimed upfront (because the cost is below the $20,000 asset threshold).
Assets costing $20,000 or more can be placed into the small business simplified depreciation pool and depreciated at 15 per cent in the first income year and 30 per cent each income year thereafter.
The instant asset write-off aims to improve cash flow by bringing forward deductions from future years, incentivising small businesses to invest in new equipment and technology, while reducing compliance costs for small businesses (as the depreciation does not need to be tracked over time).
Speaking following the passing of the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025, federal Treasurer Jim Chalmers commented: “Up to 4.1 million small businesses with turnover of less than $10 million a year will benefit from Labor’s extended instant asset write off…
“This will help small businesses to invest and grow, improve confidence in our markets and ensure a fairer energy market for Australian families.
“Labor will always back in Australian small businesses, industries and workers, as part of our efforts to build a more productive and resilient economy.”
The instant asset write-off is popular with small-business owners. According to research from SME lender OnDeck Australia (conducted online in March 2025 by Octopus Group across more than 500 small-business owners Australia-wide), one-third of small-business owners would like to see an expansion of the instant asset write-off.
The popularity of the $20,000 scheme has led to calls for government to make the new limit permanent, rather than extending it every year.
Earlier this year, the Commercial and Asset Finance Brokers Association of Australia (CAFBA) joined with the Council of Small Business Organisations Australia (COSBOA) to call on the government to increase the threshold to $150,000 and make the scheme permanent.
The two bodies suggested that doing so would provide more certainty to small businesses and ensure they aren’t “let down by short-term sweeteners”.
[Related: CAFBA calls for instant asset write-off to be made permanent]
