Good News for Small Businesses: The $20,000 Instant Asset Write-off Is Now Law
If you run a small business, there’s welcome news heading into the 2025–26 financial year. The Federal Government has confirmed the $20,000 instant asset write-off is now law, giving eligible businesses a valuable opportunity to reduce their taxable income and reinvest in their operations.
What is the instant asset write-off?
Normally, when a business purchases an asset, the cost is deducted gradually over several years through depreciation. The instant asset write-off changes this by allowing you to claim the full cost of an eligible asset as an immediate deduction in the same year you purchase it, rather than waiting years to see the full benefit.
This can meaningfully reduce your taxable income for the 2025–26 financial year, freeing up cash that would otherwise be taxed.
Who is eligible?
To qualify, your business needs to meet the following criteria:
Your annual turnover is less than $10 million
The asset costs less than $20,000 (the threshold applies per asset)
The asset is first used or installed, ready for use, between 1 July 2025 and 30 June 2026
The asset is used for business purposes (you can only claim the business-use portion)
Good to know: Both new and second-hand assets are eligible. And because the $20,000 threshold applies per asset, you can claim multiple assets throughout the year — as long as each one falls under the limit.
What kinds of assets qualify?
A wide range of business assets may be eligible, think tools and equipment, technology, furniture, vehicles (business-use portion), and more. The key test is that the asset must be first used or installed, ready for use, within the 2025–26 financial year.
As always, you’ll need to keep thorough records to support your claim, including proof of purchase, the date the asset was first used, and documentation of its business use.
The role of your bookkeeper
It’s important to understand the distinction between bookkeeping and tax decisions regarding the instant asset write-off.
Your bookkeeper’s role is to ensure all asset purchases are recorded accurately, with the correct dates, amounts, and account codes. In most cases, assets should be recorded to a fixed asset account, regardless of their cost. The decision to apply the instant asset write-off is a tax decision made by your accountant, not your bookkeeper.
Your bookkeeper may follow specific written instructions from your accountant about how certain purchases should be treated during the year. At the end of the financial year, your bookkeeper will flag all relevant asset purchases so your accountant can assess which ones qualify and apply the appropriate deductions in your tax return.
The best outcomes happen when your bookkeeping and accounting teams are working in sync, and that’s exactly what we help facilitate at Diverse Bookkeeping.
Want to make sure your assets are set up correctly?
Our team can help ensure your records are accurate, compliant, and ready for your accountant to maximise your deductions at tax time.
(Article sourced from the Institute of Certified Bookkeepers)