Ask most business owners what the instant asset write off threshold currently sits at, and you’ll almost certainly hear “$20,000.” Ask what the law actually says right now, and the honest answer is a fair bit murkier than that.
This is genuinely one of the most confusing periods for this concession in years, and it’s catching plenty of business owners off guard. So let’s cut through the noise and lay out exactly what’s confirmed, what’s still just a promise, and what that means for any equipment or asset purchases you’re planning right now.
A Quick Recap: What Is the Instant Asset Write Off?
The instant asset write off allows eligible small businesses to immediately deduct the full cost of a qualifying asset in the same year it’s purchased and used, rather than depreciating it gradually over several years. Buy a ute tray, a new piece of equipment, or office technology, put it to use, and the full cost comes off your taxable income straight away, rather than trickling through as a deduction over the following years.
For businesses with genuine cash flow to work with, this has long been one of the more popular and practical tax concessions available, precisely because the benefit is immediate rather than delayed.
What’s Definitely Locked In: The 2025 to 26 Year
Let’s start with the good news, because this part is completely settled. For the 2025 to 26 financial year, which ended on 30 June 2026, the $20,000 threshold was law. If you purchased an eligible asset costing less than $20,000, and it was first used or installed ready for use by 30 June 2026, that deduction is secure. Nothing about this changes retrospectively, regardless of what happens with future legislation.
Here’s Where It Gets Genuinely Confusing
For the 2026 to 27 financial year, the one we’re currently in, things are far less settled than most business owners realise.
In the May 2026 Federal Budget, the Government announced its intention to make the $20,000 threshold permanent from 1 July 2026 onward, finally ending more than a decade of the threshold being extended year by year, often at the last minute, creating genuine uncertainty for business owners trying to plan ahead.
That announcement sounds definitive. But an announcement is not the same thing as a law. The legislation required to actually make this permanent, the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, still needs to pass through Parliament. As things currently stand, that Bill has been introduced and debated, but had not yet passed at the time of writing.
Here’s the part that genuinely surprises people. Until that Bill passes, the standing legislated threshold that technically applies from 1 July 2026 is just $1,000, not $20,000. That’s the default position the law reverts to if no further extension is passed, and it’s dramatically lower than what most business owners are currently assuming.
So What Should You Actually Plan Around?
This is the practical question that matters far more than the political detail. Here’s how we’d suggest thinking about it.
The Government’s stated intention is clear, and there’s broad in principle support for making this threshold permanent. Most tax professionals consider the $20,000 threshold likely to pass eventually, given the scale of support behind it and the number of businesses it affects. But “likely” is not the same as “guaranteed,” and timing matters enormously if you’re planning a purchase around a specific tax outcome.
If you’re planning a purchase that would only make sense at the higher $20,000 threshold, it’s worth checking the current legislative status before finalising the timing of that purchase, rather than assuming the higher threshold definitely applies right now. The safest approach is to plan based on what’s actually law today, and treat the higher threshold as a likely, but not yet certain, bonus if and when the Bill passes.
What Assets Actually Qualify, Regardless of the Threshold Debate
Whatever the final threshold ends up being, the other eligibility rules remain fairly consistent. To qualify, generally speaking:
- Your business needs an aggregated annual turnover under $10 million
- You need to be using the simplified depreciation rules
- The asset must be first used, or installed ready for use, for a taxable purpose
- The $20,000 or applicable threshold applies per asset, not as a total cap, so multiple assets can each be written off individually if each falls under the limit
- Both new and second hand assets can generally qualify, though some exclusions apply
One detail that catches people out regularly involves motor vehicles. Passenger vehicles are subject to a separate car limit that sits well above the instant asset write off threshold, which means a standard passenger car typically cannot be fully written off this way, even if its price would otherwise fit under the threshold. Utes and commercial vehicles are often treated differently, which is exactly the kind of detail worth checking before assuming a vehicle purchase will qualify.
What Happens to Assets That Don’t Qualify?
If an asset costs more than the applicable threshold, or simply doesn’t meet the eligibility criteria, it doesn’t disappear from your tax planning entirely. It generally gets added to the small business simplified depreciation pool instead, where it depreciates at 15 percent in the first year and 30 percent in following years. It’s a slower path to the same eventual deduction, just spread out rather than claimed immediately.
Why Timing Still Matters, Even With the Uncertainty
Here’s a detail worth sitting with. Even setting aside the exact threshold debate, bringing forward an eligible purchase into the current financial year, rather than delaying it, still accelerates the cash flow benefit of the deduction by an entire year. That timing advantage exists regardless of which specific threshold ultimately applies.
This is exactly why waiting to see how the legislation plays out isn’t necessarily the safest move either. For many business owners, the smarter approach is proceeding with genuinely needed purchases based on current confirmed rules, rather than delaying decisions indefinitely while Parliament works through its process.
Our Honest Take
Uncertainty like this is exactly the kind of thing that trips up business owners trying to self manage their tax planning from general online information, since so much of what’s circulating right now still reflects the assumption that $20,000 is already locked in for this financial year, when the more accurate picture is genuinely more nuanced.
Getting this right isn’t about knowing the answer with absolute certainty, since even the professionals are working with a moving target right now. It’s about understanding exactly where things currently stand, planning sensibly around that, and adjusting quickly once the legislation actually passes.
Frequently Asked Questions
Should I delay a planned asset purchase until the Bill passes? Not necessarily. If the purchase genuinely benefits your business now, proceeding under the current rules, and adjusting your understanding once the legislation is finalised, is often more sensible than delaying a needed purchase indefinitely.
Will the threshold apply retrospectively to purchases made before the Bill passes? The measure is drafted to apply from 1 July 2026, meaning eligible purchases made from that date should still benefit once the legislation passes, even if the Bill itself is finalised later in the year. It’s worth confirming this directly once the legislation is settled, though.
Does this affect assets I already claimed in the 2025 to 26 year? No. That year’s $20,000 threshold is already settled law and isn’t affected by the current uncertainty around the following year.
How do I find out if the legislation has passed? The ATO’s own instant asset write off guidance page is updated once legislation is finalised, and it’s worth checking there, or simply asking your bookkeeper or BAS agent, before making a purchase decision based purely on the proposed threshold.
A Practical Example Worth Thinking Through
Say a Gold Coast tradie is planning to buy a new set of power tools and a trailer, totalling around $18,000, and is deciding whether to make the purchase now or wait a few months. Under the confirmed 2025 to 26 rules, if that purchase had been made and put to use before 30 June 2026, the deduction would be locked in with complete certainty.
Made today, in the current financial year, the same purchase sits in that grey area. It’s genuinely likely to qualify for the full deduction once the legislation passes, but as things stand, it technically depends on the standing $1,000 threshold unless and until the Bill is finalised. That’s a meaningful difference in confidence, even if the practical outcome ends up being the same either way.
This is exactly the kind of scenario worth a quick conversation with your bookkeeper or BAS agent before assuming either outcome, rather than guessing based on headlines or last year’s rules.
Let’s Plan Your Purchases Properly
Navigating a moving legislative target while still trying to run your day to day business is exactly the kind of thing that’s easy to get wrong, not because you’re not paying attention, but because the goalposts are genuinely still shifting right now.
At Flexible Financial Solutions, we keep across exactly where this legislation stands and help Gold Coast business owners make asset purchase decisions that make sense today, while staying ready to take full advantage the moment the higher threshold is confirmed.
Book your free “Ask The Experts” consultation and let’s talk through your upcoming purchases with confidence.
