The instant asset write-off lets eligible Australian small businesses, with aggregated turnover under $10 million and using the simplified depreciation rules, deduct the business portion of an asset's cost straight away instead of depreciating it. For assets first used or installed ready for use on or after 1 July 2023, the limit is $20,000 per asset, as of October 2026.
You claim it in the income year the asset is first used or installed ready for use, not the year you paid for it. That timing rule matters most at the end of June, when an asset bought but not yet delivered or installed falls into the next income year.
Who's eligible
- Businesses with an aggregated turnover of less than $10 million
- That use the simplified depreciation rules
- For assets whose full cost is less than the relevant limit
- Claimed in the year the asset is first used or installed ready for use
The ATO notes that the limit and eligibility rules have changed over time, so you have to check the limit that applied when the asset was first used or installed. Small businesses that used an asset for R&D activities can't use the simplified depreciation rules, including the instant asset write-off, for that asset.
The limit has changed over time
| Asset first used or installed ready for use | Limit (turnover under $10 million, simplified depreciation) |
|---|---|
| On or after 1 July 2023 | $20,000 |
| 12 March 2020 to 30 June 2021 (with purchase conditions) | $150,000 |
| 7:30 pm AEDT on 2 April 2019 to 11 March 2020 | $30,000 |
| 29 January 2019 to before 7:30 pm AEDT on 2 April 2019 | $25,000 |
| 1 July 2016 to 28 January 2019 | $20,000 |
The rule most owners get wrong
The full cost of the asset must be under the limit, even if you can only claim part of it. The ATO's example: Daryl buys a ute for $40,000 on 28 July 2025 and expects to use it for business 40% of the time. The business portion is $16,000, which is under $20,000, but he can't use the instant asset write-off because the whole cost of the ute is over the limit. Instead, the $16,000 goes into his small business pool.
Trade-ins work the same way. The ATO says you work out the full cost using the purchase price before any trade-in credit is applied.
Business and personal use
You can only deduct the business portion, called the taxable purpose portion. The ATO's example: Fiona, a sole trader, buys a computer for $6,800 that she uses 80% of the time for business, and a printer for $700 used only for business. She claims $5,440 for the computer and $700 for the printer, a total of $6,140, in the Business and professional items schedule of her 2025 to 26 return.
GST and the asset's cost
If you're registered for GST and can claim a full GST credit, you leave the GST out when working out the asset's cost. If you can only claim part of the credit, the cost is reduced by the portion you can claim. If you're not registered for GST, you include the GST you paid. My guide on registering for GST in Australia explains when registration applies.
Cars have their own limit
A car limit applies to passenger vehicles designed to carry fewer than 9 passengers and a load of less than one tonne. For the 2025 to 26 income year it's $69,674. In the ATO's example, a partnership buys an $80,000 car used 75% for business: it can't use the instant asset write-off because the car costs more than $20,000, so it adds $52,255 to its small business pool, and the $27,745 balance can't be claimed under any depreciation rules.
How to claim, step by step
- Check your aggregated turnover is under $10 million and that you use the simplified depreciation rules.
- Confirm the asset's full cost, before trade-ins and excluding any GST you can claim back, is under $20,000.
- Note the date it was first used or installed ready for use; that sets the income year.
- Work out the business portion of the cost.
- Claim it in the Business and professional items schedule of that year's return.
- Put assets over the limit into your small business pool instead.
If you're setting up, you'll also need an ABN and should know how a BAS fits into your GST reporting.
My verdict
The instant asset write-off is a good deal if you use it the way the ATO intends: buy what you need, have it installed and in use by 30 June, and check the whole price is under $20,000 before you count on the deduction. Don't buy a $40,000 ute expecting to write off the business half, because the ATO won't let you. Keep the delivery and installation dates with the invoice, because those, not the payment date, decide the year.
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Frequently asked questions
What is the instant asset write-off limit for 2026?
For assets first used or installed ready for use on or after 1 July 2023, the limit is $20,000 per asset for businesses with aggregated turnover under $10 million using simplified depreciation, as of October 2026.
Does a trade-in reduce the cost for the $20,000 test?
No. The ATO says you work out the full cost using the purchase price before any trade-in credit is applied.
Who can use the instant asset write-off?
Businesses with an aggregated turnover of less than $10 million that apply the simplified depreciation rules.
Is the $20,000 limit before or after GST?
If you're registered for GST and can claim a full GST credit, you exclude the GST when working out the cost. If you're not registered, you include it.
Can I claim part of an asset that costs more than $20,000?
No. The asset's entire cost must be less than the limit, even if you only claim the business portion.
When do I claim the instant asset write-off?
In the income year the asset is first used or installed ready for use.
Can I use the instant asset write-off for a car?
Only if the car's full cost is under the $20,000 limit. Passenger vehicles also have a separate car limit, which is $69,674 for the 2025 to 26 income year.
What happens to assets over the limit?
They're generally added to your small business pool and depreciated there instead.
