If you run a small business and need new equipment, tools or other assets, there's good news.
From 1 July 2026, the instant asset write-off this opens in a new window (IAWO) limit has been permanently increased to $20,000, allowing eligible small business entities (SBEs) to claim an immediate deduction for qualifying depreciating assets.
Is my small business eligible for the instant asset write-off?
You may be eligible to claim a deduction under the instant asset write-off in an income year if you are an SBE in that income year and have elected to use the simplified depreciation rules this opens in a new window . To be an SBE in an income year you must carry on a business and have an aggregated annual turnover of less than $10 million in that income year.
If you’re eligible, you can claim an immediate deduction for the taxable use portion of your eligible depreciating assets in an income year that:
you first used, or had installed ready for use, in that relevant income year and
that cost less than $20,000.
There are some assets that are not eligible for deductions under SB simplified depreciation, including the IAWO, and for which you must claim a deduction under other rules. See exclusions and limits this opens in a new window for more detail.
Is the $20,000 limit per asset?
Yes. The threshold applies to each eligible asset.
This means you’ll be able to immediately deduct the cost of all your eligible depreciating assets in an income year, that cost less than $20,000.
What about upgrades to my existing assets?
You’ll be able to claim an instant deduction in an income year for cost of the first improvement made to a depreciating asset of yours in an income year, if:
the improvement cost less than $20,000 and
you claimed an IAWO deduction under the SB simplified depreciation rules for the cost of the asset in an earlier income year.
For other improvements made to an asset after the year in which you claimed an IAWO for the asset, the asset and cost of that improvement is added to your small business depreciation pool.
Can I claim an IAWO for second-hand assets?
Both new and second-hand assets are eligible.
What if I've previously opted out of simplified depreciation?
If you've previously opted out of simplified depreciation this opens in a new window , you may be able to opt in again without waiting for the usual 5-year lock out period to end. This option is available until 30 June 2027.
What happens if one of my depreciating assets costs $20,000 or more?
If a depreciating assets costs $20,000 or more (including improvements made to it in the first income year you held it) you cannot claim an instant deduction for that cost. These assets are added to your small business depreciation pool this opens in a new window and you must claim deductions for them under the small business depreciation pool rules.
What if the balance of my small business depreciation pool is less than $20,000?
If the adjusted balance of your small business depreciation pool is less than the low-pool value this opens in a new window threshold, you may claim a deduction for the balance. From 1 July 2026, the threshold for what qualifies as a low pool value has increased from $1,000 to $20,000.
How do I claim an instant asset write-off deduction?
To claim the instant asset write-off, include the deduction in your tax return for the income year in which the eligible asset was first used, or installed ready for use, or in which an eligible improvement was made.
