The $20,000 instant asset write-off is now permanent for Australian small businesses with turnover under $10 million, confirmed in Budget 2026-27. Eligible businesses can immediately deduct the full cost of qualifying assets in the year they're first used — instead of depreciating them over multiple years.
For nine years now, the instant asset write-off has been a temporary measure. Every Budget cycle, business owners asked the same three questions of their accountants:
- Will it continue?
- Will the threshold change?
- Should we buy now, or wait?
Budget 2026-27 finally answered all three. From 1 July 2026, the AUD $20,000 instant asset write-off becomes permanent for eligible small businesses under AUD $10 million turnover.
That ends a decade of annual uncertainty and changes how service businesses can plan equipment, technology, and operational upgrades over the next 5-10 years instead of just the next 12 months.
TL;DR: The AUD $20,000 instant asset write-off is now permanent from 1 July 2026 for eligible businesses under AUD $10 million turnover. That changes how service businesses plan equipment, technology, and operational upgrades going into FY27 and beyond.
What you'll find in this guide:
- What the permanent instant asset write-off actually changes
- Who qualifies under the new rules
- What service businesses may generally claim
- What usually does not qualify
- How the write-off may work alongside the new tax loss carry back rules
- Timing rules that matter before EOFY
- Records to keep
Disclaimer
This article provides general information only. Always consult your accountant or tax adviser for personalised tax advice. Eligibility, deductibility, and tax treatment depend on business structure, aggregated turnover, asset type, business-use percentage, timing, and ATO compliance requirements.
What changed in Budget 2026-27
The AUD $20,000 instant asset write-off becomes permanent from 1 July 2026 for eligible businesses under AUD $10 million turnover. That's the change.
The reason it matters is what it removes: the annual scramble to bring forward purchases before each temporary extension expired, the uncertainty about whether the threshold would survive the next Budget, and the inability to plan technology upgrades on a horizon longer than 12 months. All of that goes away.
For service businesses, this means equipment and technology planning can happen on the cadence the business actually needs, not the cadence the temporary tax rule forced.
Business.gov.au: https://business.gov.au/news/budget-2026-27 Treasury factsheet: https://budget.gov.au/content/factsheets/download/factsheet-backing-small-business.pdf
What the instant asset write-off does
The instant asset write-off allows eligible small businesses to immediately deduct the business portion of eligible assets under the threshold, instead of depreciating them over several years.
In plain English: rather than claiming small portions over time, you may generally claim the full deduction upfront in the year the asset is first used or installed ready for use.
It commonly applies to equipment, technology, business tools, office assets, certain business vehicles, and operational hardware.
ATO guidance: 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
Who qualifies for the $20,000 instant asset write-off?
The rule generally applies to businesses with aggregated turnover under AUD $10 million. That covers most tradies, vet clinics, dental clinics, allied health practices, professional services, consultants, agencies, and mobile service businesses.
Eligibility also depends on business structure, asset type, timing, and whether the asset is genuinely used for business purposes. Always confirm with your accountant before making major purchases.
What service businesses typically claim
Tools and equipment
Where tradies feel the rule most directly. Electrical testing equipment, power tools, diagnostic devices, treatment equipment, portable machinery, workshop equipment — anything where a single eligible asset sits under the threshold.
Vet clinics often use it for portable ultrasound, monitoring equipment, treatment devices. Allied health for treatment tables, rehab equipment, assessment tools.
The important detail: each asset generally needs to fall under the threshold individually, not in total.
Technology and IT equipment
Increasingly relevant for service businesses. Laptops, desktops, tablets, mobile phones, monitors, networking hardware, reception devices, office IT.
Many businesses now buy hardware alongside AI systems, communication systems, and operational software. The hardware portion often qualifies under the write-off. The SaaS subscriptions usually don't — they're treated as operating expenses instead. More on that below.
Vehicles
Vehicle eligibility narrows because most vehicles exceed the threshold. Some smaller vehicles, older vehicles, utility trailers, and smaller operational transport assets may still qualify if they sit below the threshold and satisfy ATO requirements. Business-use percentage matters significantly.
Office furniture and fit-outs
Desks, chairs, reception furniture, waiting-room furniture, storage systems, small fit-out items. Larger fit-outs and renovations usually fall under different treatment rules.
Bundled software and hardware systems
This category is growing. Reception kiosks, AI phone hardware, clinic communication hardware, POS systems, booking terminals. Where hardware is the dominant component, the system may qualify differently from standalone SaaS subscriptions. This area needs accountant review more than most.
What usually doesn't qualify
Common misunderstandings:
- Assets above AUD $20,000
- Large renovations
- Building improvements
- Internal software development projects
- Pure SaaS subscriptions
- Assets not ready for use before EOFY
- Personal-use assets
- Unpaid purchases
The ATO focuses on genuine business purpose, timing, asset classification, and business-use percentage. Don't assume every technology purchase automatically qualifies — the difference between "eligible asset" and "operating expense" is bigger than most owners realise.
The simple maths
Say your business purchases AUD $15,000 of eligible equipment before EOFY.
Without the write-off, the asset would normally depreciate gradually over several years. With the write-off, the eligible business-use portion may generally be deducted upfront.
- AUD $15,000 deduction at 25% company tax rate = AUD $3,750 reduction in taxable income impact
- At 30% = AUD $4,500
This doesn't make the equipment free. You're still spending the cash. What changes is the timing of the deduction — which can matter significantly if your tax position is uneven across years.
The bigger opportunity — combining the write-off with tax loss carry back
This is the part most owners haven't joined up yet.
The permanent instant asset write-off becomes much more powerful when combined with the permanent tax loss carry back rules also announced in Budget 2026-27.
Treasury's worked example shows how:
- A business invests in multiple eligible assets under AUD $20,000 each
- The deductions push the business into a tax loss for the year
- The tax loss may then potentially be carried back against previously taxed profits
- That may create a refund of prior-year tax already paid
The two rules together mean some businesses can effectively use a strong prior-year tax position to part-fund a soft current-year investment. That timing match is rare in Australian tax design and worth understanding properly with an accountant.
Treasury example: https://budget.gov.au/content/factsheets/download/factsheet-backing-small-business.pdf
Read the full guide to tax loss carry back for Australian service businesses. Speak with your accountant if you think the combination may apply.
Practical service business scenarios
An electrician upgrading tools and equipment
An electrician purchases AUD $7,000 testing equipment, AUD $4,000 power tools, and AUD $3,500 battery systems before EOFY. Each asset falls below the threshold individually. Depending on eligibility and business use, the assets may generally qualify for immediate deduction treatment.
A vet clinic replacing diagnostic equipment
A vet clinic purchases portable ultrasound equipment under AUD $20,000. If installed and ready for use before EOFY, the asset may generally qualify.
An allied health clinic upgrading reception technology
A physiotherapy clinic purchases reception computers, booking tablets, and waiting-room devices, upgrading operational systems before FY27 begins. Eligible assets under the threshold may generally qualify for immediate deduction.
Timing — when the asset must be ready for use
This trips up more businesses than the threshold itself.
The asset generally needs to be first used, or installed ready for use, before the relevant EOFY deadline. Ordering equipment before 30 June is not always enough. Delays in delivery, installation, setup, or activation can push the deduction into the following year.
If you're planning a significant purchase, "ordered" and "installed ready for use" are two different events — and only the second one matters for the deduction.
ATO guidance: 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
Records to keep
Tax invoices, asset descriptions, purchase dates, install dates, payment confirmations, finance documents, business-use calculations, asset registers.
Good documentation reduces risk later — especially when businesses make multiple purchases quickly in the lead-up to EOFY.
What about software and AI subscriptions?
One of the most common misunderstandings.
Most SaaS subscriptions — CRM systems, AI subscriptions, booking systems, marketing platforms, AI communication tools — are usually treated differently from depreciating physical assets. They're often operating expenses, not capital assets.
That means they may still be deductible. Just under different tax rules.
Read: AI and automation as a tax deduction Also read: EOFY prepayment rule
Frequently asked questions
Is the AUD $20,000 instant asset write-off now permanent?
Yes. Budget 2026-27 confirmed the rule becomes permanent from 1 July 2026 for eligible small businesses.
Does the rule still apply for FY26?
Yes. The temporary arrangement still applies through FY26 ending 30 June 2026, before the permanent system begins from FY27.
Does every asset under AUD $20,000 qualify automatically?
No. Eligibility depends on asset type, business use, timing, and ATO rules.
Can businesses claim multiple assets?
Generally yes, provided each individual asset stays under the threshold and satisfies eligibility requirements.
Do SaaS subscriptions qualify under the instant asset write-off?
Usually not. Most SaaS subscriptions are treated as operating expenses instead.
Does the asset need to be paid for before EOFY?
Usually yes. Timing and readiness for use matter heavily.
What does "installed ready for use" mean?
The asset generally needs to be operational or available for business use before the EOFY deadline.
Can sole traders use the instant asset write-off?
Potentially yes, if they satisfy eligibility requirements.
Should businesses rush purchases before EOFY?
Not blindly. Tax outcomes should support genuine business needs, not unnecessary spending.
Key takeaways
- AUD $20,000 instant asset write-off becomes permanent from 1 July 2026
- Eligible small businesses under AUD $10 million turnover may generally qualify
- The rule allows immediate deduction treatment for eligible assets under the threshold
- Timing matters more than most owners realise — assets need to be installed ready for use, not just ordered
- Multiple assets may qualify if each sits below the threshold individually
- Most SaaS and AI subscriptions are treated under different tax rules
- The combination with tax loss carry back creates planning opportunities most businesses haven't joined up yet
Plan equipment on the cadence the business needs, not the cadence the tax rule used to force
The biggest practical change from this rule isn't the deduction itself. It's that you can finally plan technology and equipment investment on the timeline your business actually needs.
If you're planning technology upgrades, admin automation systems, AI communication tools, or operational improvements before EOFY, this is the right moment to structure it properly with your accountant. Calculate what these investments return before you commit.
Sources
- Source: 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
- Source: https://business.gov.au/news/budget-2026-27
- Source: https://budget.gov.au/content/factsheets/download/factsheet-backing-small-business.pdf
- Source: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/deductions/prepaid-expenses
- Source: https://www.cpaaustralia.com.au/
- Source: https://www.charteredaccountantsanz.com/
Written by Katrina Curll — Co-Founder of Linkai Digital. Twenty years in strategy, automation, and performance marketing, helping Australian service businesses build systems that scale without the busywork.
