The $20 000 Instant Asset Write-Off 2025: What Small Businesses Should Know

The $20 000 Instant Asset Write-Off 2025 – Your Complete Guide

If you run a small business in Penrith or Western Sydney, there’s good news for your bottom line.
The Federal Government has extended the $20 000 instant asset write-off until 30 June 2026, allowing eligible small businesses to immediately deduct the full cost of assets costing less than $20 000.

Here’s how it works, who qualifies and how to use it to reduce tax and boost growth before the deadline.

What Is the Instant Asset Write-Off?

The instant asset write-off lets businesses claim an immediate deduction for the cost of eligible assets rather than depreciating them over several years.
It applies on a per-asset basis — so you can claim multiple items under the $20 000 limit each.

Who Is Eligible?

To qualify for the $20 000 threshold in the 2025–26 income year, your business must:

  • Have an aggregated turnover of less than $10 million.

  • Use the simplified depreciation rules for small businesses.

  • Purchase and install the asset for use between 1 July 2024 and 30 June 2026.

The limit applies to each asset separately, so you can immediately deduct the full cost of multiple assets costing less than $20 000 each.

What Assets Can Be Claimed?

Eligible assets must be:

  • Tangible and depreciable, such as tools, machinery, office equipment and computers.

  • First used or installed ready for use within the eligibility period.

  • Used for business purposes (only the business-use portion can be claimed for mixed-use items).

Examples

  • A landscaper buys a new ride-on mower for $17 000 – immediately deductible.

  • A retailer purchases five POS terminals at $3 000 each – each qualifies individually.

  • An electrician upgrades a ute with a tool fit-out costing $15 000 – also deductible.

What’s Not Eligible

Some assets don’t qualify, including:

  • Assets costing $20 000 or more (excess goes into the general depreciation pool).

  • Horticultural plants and capital works like buildings or extensions.

  • Leased assets not owned by your business.

The Deadline: 30 June 2026

The ATO has extended the measure for an extra year to support business investment and cash flow.
However, assets must be installed and ready for use by 30 June 2026, not just on order or deposit.

If you delay delivery or installation, you could lose the deduction for that financial year.

Why It Matters for Small Businesses

Immediate Cash Flow Boost

You can reduce your taxable income in the same year you buy the asset — freeing up cash for growth or debt repayment.

Simplified Record-Keeping

Instead of tracking depreciation schedules for five years, you claim it all in one line item on your return.

Encourages Reinvestment

If your equipment is outdated, this is the perfect time to upgrade before the incentive ends.

Maximising Your Tax Benefit

1. Plan Purchases Strategically

Avoid last-minute spending sprees in June. Instead, plan equipment purchases around cash flow and business needs.

2. Bundle Smaller Upgrades

Multiple items under $20 000 can be claimed in the same year — from computers and printers to tools and furniture.

3. Check Your GST Position

If you’re registered for GST, use the GST-exclusive cost when calculating eligibility. If not, use the GST-inclusive amount.

4. Keep Proper Records

Save invoices, installation dates and proof of use to substantiate claims in case of audit.

5. Use the Simplified Depreciation Rules

These rules also allow you to write off the balance of your depreciation pool if it drops below $20 000.

Common Questions About the Instant Asset Write-Off

Q1. Can I claim second-hand equipment?

Yes — second-hand assets qualify as long as they meet the cost and business-use criteria.

Q2. What if I finance the asset?

You can still claim it if you own the asset outright or under a chattel mortgage. Leased items don’t qualify.

Q3. Can trusts and partnerships claim it?

Yes — provided they meet the small business entity criteria and use the asset mainly for business.

Q4. What happens after June 2026?

Unless extended again, the threshold will likely drop back to the standard simplified depreciation limit (usually around $1 000).

Example: How It Works in Practice

Ben runs a local carpentry business in Penrith. In March 2026, he buys a new dust extraction system for $14 000 and a set of cordless tools for $6 000.

Both items qualify individually under the $20 000 threshold, so Ben claims a full $20 000 deduction that year.
At a 25 % tax rate, that reduces his tax bill by $5 000 — and improves cash flow instantly.

How Carmody Accounting Helps You Maximise the Write-Off

At Carmody Accounting, we help small business owners across Penrith and Western Sydney make the most of every tax incentive. Our team can:

  • Confirm your eligibility for the $20 000 instant asset write-off.

  • Advise on timing purchases for maximum benefit.

  • Integrate asset purchases into your cash-flow and budgeting plans.

  • Ensure records and claims meet ATO requirements.

Key Takeaways

  • $20 000 threshold extended to 30 June 2026.

  • Applies per asset to businesses with turnover under $10 million.

  • Assets must be installed and ready for use by the deadline.

  • Claim multiple items if each costs under $20 000.

  • Carmody Accounting can help you plan purchases for maximum benefit.

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