The ATO just locked in the $20,000 write-off for good

{"type":"doc","content":[{"type":"paragraph","content":[{"type":"text","text":"Small businesses now have long-term certainty when it comes to writing off equipment purchases, with the Australian Taxation Office confirming the $20,000 instant asset write-off has been made a permanent feature of the tax system from 1 July 2026."}]},{"type":"paragraph","content":[{"type":"text","text":"The change was announced on 12 May 2026 as part of the 2026-27 Budget and has since passed into law. Previously, the threshold had been extended on a year-by-year basis, most recently for the 2025-26 financial year under the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025. The latest move removes that annual uncertainty altogether."}]},{"type":"heading","attrs":{"level":2},"content":[{"type":"text","marks":[{"type":"bold"}],"text":"What's actually changing"}]},{"type":"paragraph","content":[{"type":"text","text":"From 1 July 2026, small businesses with an aggregated annual turnover of less than $10 million can deduct the full cost of eligible depreciating assets costing less than $20,000, provided the asset is first used or installed ready for use within the relevant income year."}]},{"type":"paragraph","content":[{"type":"text","text":"Businesses can also deduct an amount added to the cost of an asset after it was already written off in a prior year under the simplified depreciation rules, as long as that additional cost is incurred straight after the end of the income year in which the asset was written off, and comes in under $20,000."}]},{"type":"heading","attrs":{"level":2},"content":[{"type":"text","marks":[{"type":"bold"}],"text":"Who qualifies and how it works"}]},{"type":"paragraph","content":[{"type":"text","text":"The $20,000 threshold applies per asset, not as a total cap, so eligible businesses can write off multiple qualifying purchases in the same income year rather than being limited to a single deduction."}]},{"type":"paragraph","content":[{"type":"text","text":"The ATO says the measure is designed to improve cash flow and reduce compliance costs by letting businesses claim deductions sooner, rather than depreciating assets gradually over several years."}]},{"type":"heading","attrs":{"level":2},"content":[{"type":"text","marks":[{"type":"bold"}],"text":"The fine print on pooling"}]},{"type":"paragraph","content":[{"type":"text","text":"Assets valued at $20,000 or more still go into the small business simplified depreciation pool, where they depreciate at 15 per cent in the first income year and 30 per cent in each year after that. Pool balances under $20,000 at the end of an income year can also be written off in full."}]},{"type":"paragraph","content":[{"type":"text","text":"Businesses that opt out of the simplified depreciation regime are usually locked out of re-entering it for five years. That restriction remains suspended until 30 June 2027."}]},{"type":"heading","attrs":{"level":2},"content":[{"type":"text","marks":[{"type":"bold"}],"text":"Where this sits in the bigger picture"}]},{"type":"paragraph","content":[{"type":"text","text":"The permanent $20,000 threshold builds on the temporary extension already legislated for the 2025-26 financial year, meaning businesses have now had consecutive access to the higher write-off limit without a gap. Full details are available on the "},{"type":"text","marks":[{"type":"link","attrs":{"href":"https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business/instant-asset-write-off","target":"_blank","rel":"noopener noreferrer nofollow","class":"text-brand-500 hover:text-brand-600 underline","title":null}}],"text":"ATO's instant asset write-off page"},{"type":"text","text":"."}]}]}