The Instant Asset Write-Off is Now Permanent: What It Means for Your Business

For years, planning a larger equipment purchase came with a nagging side question: will the $20,000 instant asset write-off still be there by the time we buy? The threshold was set one year at a time, often confirmed close to the deadline, which made it hard to plan with any real certainty.

That part is now settled. In August 2026, Parliament passed legislation making the $20,000 instant asset write-off permanent for small businesses from 1 July 2026. Here's what that changes, and what it doesn't.

What actually passed

There were two measures for small business in the one Bill.

The first is the write-off itself, now permanent rather than renewed year to year. It applies to businesses with an aggregated turnover under $10 million, for eligible assets first used or installed ready for use from 1 July 2026.

The second is a loss carry-back measure for companies, which we come to further down.

What the permanent write-off changes for you

The headline change is certainty. You can weigh a purchase on whether the asset is right for the business and whether the timing suits your cash flow, rather than racing a legislative deadline that might or might not be extended.

A few points are worth keeping in mind:

• The $20,000 limit applies per asset, so you can immediately deduct several assets in the same year, if each one is under the threshold.

• It's the business-use portion you deduct, not necessarily the full purchase price.

• Assets costing $20,000 or more don't miss out. They go into the small business simplified depreciation pool and are depreciated over time instead.

What it doesn't do

It's worth being clear about the limits, because the write-off is sometimes read as free money.

It's a deduction rather than a cash rebate. It reduces your taxable income, so the benefit depends on having profit to offset. If your business made a loss, the deduction adds to that loss rather than putting cash back in your pocket this year.

It also brings a deduction forward rather than creating a new one. You would have claimed the asset eventually through depreciation, and the write-off simply lets you claim it sooner. The timing still matters, because the deduction lands in the year the asset is first used or installed ready for use, so the date can affect which year you benefit.

The loss carry-back measure

Alongside the write-off, the same Bill reintroduced a loss carry-back for companies. In short, an eligible company that makes a loss may be able to offset it against tax it paid in the previous two years and receive a refundable offset, subject to conditions.

The key point for most readers is who it applies to. This one is for companies, not sole traders, partnerships or trusts. If you operate through a company and expect a loss year, it's worth raising with your accountant.

Where good records make the difference

Both measures are claimed through your income tax return, which sits with your accountant or tax agent. Where we help is everything that makes the claim clean and easy to substantiate:

• Recording each asset purchase correctly, with the invoice and the date it was first used or installed.

• Keeping the business-use percentage clear for assets used partly for private purposes.

• Tracking which assets fall under the threshold and which belong in the depreciation pool.

Good bookkeeping through the year is what turns a rule like this into a deduction you can claim without a scramble in July.

Where this leaves you

The uncertainty that used to surround the write-off is gone, which makes planning simpler. The measure rewards deliberate purchasing decisions and tidy records rather than a last-minute rush. If a larger purchase is on your list, you can weigh it on its merits and its timing.

If you'd like your asset purchases recorded cleanly through the year, so the write-off is simple for your accountant to claim, we're happy to set that up with you.

Disclaimer: This article is intended to provide general guidance and is not specific advice. We encourage you to seek tailored advice for your circumstances.