The Instant Asset Write-Off has been extended to mid-2026, but COSBOA says the $20,000 cap is too low for real investment
What’s happening: The Australian Government has confirmed the Instant Asset Write-Off will continue until 30 June 2026, giving small businesses tax relief on eligible purchases. However, the Council of Small Business Organisations Australia says the current $20,000 threshold is insufficient and calls for a permanent scheme with a $150,000 cap.
Why this matters: Over five million Australians work in small businesses, which contribute hundreds of billions to the economy. COSBOA argues that predictable, long-term investment incentives drive productivity, innovation and growth, while short-term extensions create uncertainty that delays purchasing decisions and weakens competitiveness.
The extension of the Instant Asset Write-Off through to mid-2026 offers welcome certainty for small businesses, but industry leaders say the move doesn’t go far enough to support genuine productivity investment.
The Council of Small Business Organisations Australia has acknowledged the government’s decision as a positive step, yet maintains that ongoing short-term extensions frustrate planning and undermine confidence across the sector.
Extension confirmed
COSBOA Chair Matthew Addison said locking in the incentive provides clarity for the current financial year, but the real issue lies in the stop-start nature of the policy.
“The current $20,000 threshold falls well short of supporting meaningful upgrades in equipment, vehicles, technology and digital tools,” Mr Addison said.
The Instant Asset Write-Off allows eligible businesses to claim an immediate tax deduction for asset purchases, rather than depreciating them over time. It has been extended multiple times in recent years, often with uncertainty lingering until late in the financial year.
$20,000 “falls short”
COSBOA has consistently argued that small business policy only works when it is stable, predictable and aligned with real-world operating costs. The organisation is calling for a permanent scheme with a threshold of at least $150,000.
“Small businesses want to invest in machinery, digital systems and equipment that improves how they operate. We therefore need a threshold that enables genuine productivity investment, not token purchases,” Mr Addison said.
He described a higher, permanent threshold as more than just a tax measure, positioning it as a productivity, innovation and competitiveness strategy.
“When small businesses invest, they hire, innovate and digitise. They become more efficient and more resilient. And because many of these assets are purchased locally, the benefits flow through manufacturers, suppliers and service providers,” he said.
Productivity at stake
Mr Addison said uncertainty surrounding the IAWO has repeatedly held back investment decisions.
“Each time this measure is left unresolved until halfway through the year, or later, businesses delay or cancel purchases. That hesitation affects productivity, growth and confidence. A permanent framework would remove this uncertainty and allow small businesses to plan properly,” he said.
The call comes in line with outcomes from the Economic Reform Roundtable, where COSBOA emphasised the need for durable, long-term investment frameworks that genuinely support the sector.
Permanent reform urged
As part of a broader productivity agenda, COSBOA is also advocating for complementary tax reform. The organisation supports the Productivity Commission’s recommendation to reduce the small business company tax rate to 20 per cent.
“Lowering the tax rate for small business would directly strengthen investment capacity and economic growth,” Mr Addison said. “It’s an important next step that would work hand-in-hand with a permanent Instant Asset Write-Off.”
COSBOA’s long-standing position, reflected in submissions to Treasury and the Productivity Commission, centres on four key elements: a permanent Instant Asset Write-Off, a threshold aligned to real operating costs of at least $150,000, clear and timely communication from government, and predictable long-term policy settings.
“Small businesses employ more than five million Australians and contribute hundreds of billions to the economy,” Mr Addison said. “If we want a stronger, more competitive economy, we need to give small business the confidence to invest. A permanent IAWO is one of the simplest, most effective steps the Government can take.”
COSBOA will continue working with government, Treasury and MPs to ensure long-term investment incentives remain central to the policy agenda.
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