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    Instant Asset Write-Off and Simplified Depreciation

    The $20,000 threshold for 2025-26 (permanent from 1 July 2026), eligible and excluded assets, the simplified depreciation pool at 15%/30%, motor vehicle cost limit, lockout suspension, and the end of temporary full expensing.

    Small business entities with aggregated turnover under $10 million can immediately deduct the cost of eligible depreciating assets costing less than $20,000 each in 2025-26. Assets costing $20,000 or more go into the simplified depreciation pool, depreciated at 15% in the first year and 30% declining balance thereafter. The 2026-27 Federal Budget made the $20,000 threshold permanent from 1 July 2026, ending years of annual temporary extensions.

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    Current threshold: $20,000 per asset for 2025-26

    The instant asset write-off threshold is $20,000 for eligible assets first used or installed ready for use between 1 July 2025 and 30 June 2026. This was legislated via the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025. Without the 2026-27 Budget announcement, the threshold would have reverted to $1,000 from 1 July 2026. The permanent $20,000 threshold from 1 July 2026 still requires passage of enabling legislation.

    Simplified depreciation pool: 15% first year, 30% thereafter

    Assets costing $20,000 or more must be placed into the small business simplified depreciation pool. The pool applies a 15% rate on the taxable-use cost in the first year the asset is added, and a 30% declining balance rate on the pool's opening balance in subsequent years. If the total pool balance falls below $20,000 at the end of the 2025-26 income year, the entire pool balance can be immediately written off.

    Eligible and excluded assets

    Most tangible depreciating assets used in business qualify for the instant write-off or simplified pool. However, several categories are specifically excluded.

    Eligible assets

    Tools and equipment, computers, laptops, tablets, office furniture (freestanding), office equipment, and motor vehicles (subject to the car depreciation limit). The asset must be first used or installed ready for use for a taxable purpose within the relevant income year. Simply purchasing the asset before 30 June is not sufficient.

    Excluded assets

    Assets leased out for more than 50% of the time, horticultural plants, depreciating assets used in rental properties (generally subject to capital works provisions), software development pools, and assets allocated to low-value pools under Division 40.

    Motor vehicle cost limit interaction

    The car depreciation limit for 2025-26 is $69,674. This caps the maximum depreciable value of a passenger vehicle regardless of the actual purchase price. When the limited value is under $20,000, the capped amount can be instantly written off. For GST-registered businesses, the maximum GST credit is $6,334 (one-eleventh of $69,674). The car limit does not apply to vehicles with a load capacity of one tonne or more, or vehicles designed for nine or more passengers.

    Lockout rule: suspended until 30 June 2027

    The traditional five-year lockout rule prevents businesses from re-entering simplified depreciation for five years after opting out. This lockout has been suspended through 30 June 2026, and the 2026-27 Budget extended the suspension to 30 June 2027. This allows businesses that previously opted out of simplified depreciation to re-enter the regime during this period without waiting out the full five years.

    Temporary Full Expensing: ended 30 June 2023

    The COVID-era Temporary Full Expensing (TFE) allowed eligible businesses with turnover under $5 billion to immediately deduct the full cost of qualifying assets acquired and first used between 6 October 2020 and 30 June 2023. TFE is no longer available. Assets acquired from 1 July 2023 onwards fall under the standard instant asset write-off and simplified depreciation pool rules.

    2026-27: permanent $20,000 threshold

    The 2026-27 Federal Budget made the $20,000 instant asset write-off permanent from 1 July 2026 for entities with aggregated turnover under $10 million. The pool write-off threshold also remains at $20,000. The lockout suspension extends to 30 June 2027. No cap on the number of assets.

    Worked example: electrician purchasing multiple assets

    Sam, a sole trader electrician in Newcastle, purchases the following assets in September 2025: a work van ($52,000, load capacity over one tonne), a thermal imaging camera ($8,500), a laptop ($2,200), and a power tool kit ($4,800). All assets are first used in the same month.

    Statute references

    • ITAA 1997 Division 328 (small business entities)
    • ITAA 1997 Subdivision 328-D (simplified depreciation rules)
    • ITAA 1997 s 328-180 (instant asset write-off provision)
    • Income Tax (Transitional Provisions) Act 1997 (temporary threshold measures and lockout suspension)
    • Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025 (2025-26 threshold extension)

    Frequently asked questions

    Is there a limit on how many assets I can write off in a year?+
    No. There is no cap on the number of assets you can instantly write off in a single year, provided each individual asset costs less than $20,000 (excluding GST if registered for GST). You could purchase ten separate items at $19,999 each and deduct all of them in the same year.
    What happens to assets that cost $20,000 or more?+
    Assets costing $20,000 or more are placed into the small business simplified depreciation pool. The pool depreciates at 15% of taxable-use cost in the first year and 30% of the pool's opening balance in subsequent years (declining balance method). If the total pool balance falls below $20,000 at the end of the income year, the entire remaining balance can be written off immediately.
    Does the $20,000 threshold include GST?+
    It depends on your GST registration status. If you are registered for GST and can claim input tax credits, the $20,000 threshold applies to the GST-exclusive cost. If you are not registered for GST, the threshold applies to the GST-inclusive cost. This distinction can determine whether a borderline purchase qualifies for immediate write-off.
    Can I use the instant asset write-off for a car that costs more than $69,674?+
    You can claim depreciation only up to the car cost limit of $69,674, regardless of the actual purchase price. If the limited amount is under $20,000, the capped value can be instantly written off. The car limit applies to passenger vehicles but does not apply to vehicles with a load capacity of one tonne or more, or vehicles designed for nine or more passengers.

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