The Current Position: Announced, but Not Yet Law
STATUS CHECKED 9 AUGUST 2026
The permanent $20,000 threshold is contained in the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026. The bill remains before Parliament and is not yet law.
Check the Bill Status →On 13 May 2026, the Federal Treasurer handed down the 2026–27 Budget. Among the headline measures was a long-awaited change for Australia’s 2.4 million small businesses: the $20,000 instant asset write-off is proposed to become a permanent feature of the tax system, rather than being extended year by year.
The proposal would remove annual uncertainty if enacted. It does not create certainty while the bill remains before Parliament. A tax decision should be based on legislation in force for the relevant income year, the asset’s cost and use date, and the business’s eligibility.
The $20,000 extension through 30 June 2026 was enacted separately. For assets first used or installed ready for use from 1 July 2026, confirm the current law before relying on the proposed permanent threshold.
Important Disclaimer
The proposal is not yet law as at 9 August 2026. Check the Parliament bill tracker, the ATO instant asset write-off guidance, and a registered tax adviser before acting. This article is general information only.
Before vs After: Temporary vs Permanent Write-Off
Understanding what actually changed helps you plan strategically. Here’s a quick comparison:
| Feature | Before (Temporary) | After (Proposed Permanent) |
|---|---|---|
| Annual certainty | Extended year by year, often late | Proposed as ongoing; bill pending |
| Threshold | $20,000 per asset (2023–26) | $20,000 per asset (ongoing) |
| Eligible turnover | < $10 million aggregated | < $10 million aggregated |
| Planning horizon | One year at a time | Multi-year investment planning |
| Business confidence | Low — unclear beyond current year | Would improve planning certainty if enacted |
| Parliament risk | High — legislation often delayed | Still subject to Parliament |
The practical implication is conditional: businesses can model a permanent-threshold scenario, but should not treat it as law until the bill receives assent.
Who Qualifies for the $20,000 Instant Asset Write-Off?
The eligibility rules remain unchanged from the temporary write-off:
- Business type: Any business entity (sole trader, partnership, company, trust)
- Turnover threshold: Aggregated annual turnover under $10 million
- Asset threshold: Each eligible asset costs less than $20,000 (ex-GST if you are registered for GST)
- Usage: The asset must be first used or installed ready for use in Australia for a taxable purpose
- Timing: The asset must be used or installed in the financial year you want to claim
What About Businesses Over $10 Million Turnover?
If your aggregated turnover is $10 million or more, the instant asset write-off does not apply under the small business rules. However, other depreciation methods are available — including the diminishing value and prime cost methods.
Multiple Assets in One Year
There is no limit on how many assets you can claim. The $20,000 threshold applies per asset, not per business. You could buy a $15,000 trailer, a $12,000 compressor, and an $18,000 GPS tracking system in the same year and claim all three immediately.
Which Assets Can You Write Off Under $20,000?
The range of eligible assets is broad. Here are the most commonly financed in each category:
Vehicles & Transport
- Light commercial utes (HiLux, Ranger, D-MAX) — second kit or trade-up units under $20k
- Trailers — box trailers, car trailers, tipping trailers
- Motorbikes & ATVs used for business
- Golf buggies, utility vehicles for large properties
Earthmoving & Construction
- Mini excavators (1.5T–3T) — often priced under $20,000 used
- Plate compactors, rammers, concrete mixers
- Scaffolding, formwork kits
- Laser levels, survey equipment
Agricultural & Rural
- Slashers, hay rakes, post-hole diggers, sprayers
- Water pumps, irrigation equipment
- Horse floats (used in agribusiness or equine training)
- Quad bikes, side-by-side UTVs
Technology & Office
- Laptops, desktop computers, servers
- POS systems, EFTPOS terminals
- Security cameras, access control systems
- Commercial printers, label makers
Energy & Sustainability
- Solar battery storage systems (business-use portion)
- EV charging stations for business premises
- Solar panels for business premises
Workshop & Trade Equipment
- Power tools, welding equipment, air compressors
- Spray booths, hoists (smaller models)
- Catering equipment (commercial fridges, ovens)
- Medical and dental equipment
What Doesn’t Qualify?
- Assets used 100% privately (no business use)
- Land and buildings (separate rules apply)
- Horticultural plants
- Assets leased out to another entity in certain circumstances
- Assets costing $20,000 or more per asset (these go into the depreciation pool)
Model Your Tax Savings in 60 Seconds
Enter your asset price, loan term, and tax rate to see your exact after-tax cost — chattel mortgage vs finance lease, side by side.
Open Free Calculator →How the Write-Off Works With Chattel Mortgage vs Finance Lease
Not all finance structures let you claim the instant asset write-off. The critical rule is: you must own the asset to claim the deduction. Here’s how the most common structures stack up:
| Finance Structure | You Own the Asset? | Instant Write-Off? | GST Upfront? | Best For |
|---|---|---|---|---|
| Chattel Mortgage | Yes | Full cost | Yes (on BAS) | GST-registered businesses, max tax benefit |
| Hire Purchase | Yes (on completion) | Full cost | Yes | Similar to chattel mortgage |
| Finance Lease | Financier owns | No | No | Businesses wanting lower monthly payments |
| Operating Lease | Financier owns | No | No | Short-term use, regular upgrades |
Chattel Mortgage: The Optimal Structure for the Write-Off
Under a chattel mortgage, you own the asset from day one and the lender takes a charge (mortgage) over it as security. This means:
- You claim the full purchase price as an immediate deduction (not just the repayments)
- You claim the GST credit on your next BAS (usually the very next quarter)
- You can claim interest costs as a business expense across the loan term
The combination of these three deductions means the actual after-tax cost of a financed asset can be dramatically lower than the purchase price suggests.
What About Finance Leases?
Under a finance lease, the financier owns the asset and you rent it. You cannot claim the instant asset write-off. However, you can claim the lease payments as a tax deduction, and the GST on each payment. For some businesses, a lease is still the right choice — but if the instant write-off is a priority, chattel mortgage wins.
Real-World Examples: How Much Can You Actually Save?
Let’s put numbers to this. These examples assume a GST-registered small business with a 27.5% company tax rate. Consult your accountant for your specific situation.
Example 1: $18,500 Trailer via Chattel Mortgage
| Item | Amount |
|---|---|
| Purchase price (inc. GST) | $20,350 |
| GST credit on BAS (if registered) | $1,850 refunded |
| Tax write-off (ex-GST) | $18,500 |
| Tax saving (27.5%) | $5,087 |
| Total Year 1 benefit (GST + tax saving) | $6,937 |
| Net cost after tax & GST | $13,413 |
Example 2: $12,000 Commercial Fridge (Hospitality) via Chattel Mortgage
| Item | Amount |
|---|---|
| Purchase price (inc. GST) | $13,200 |
| GST credit on BAS | $1,200 refunded |
| Tax write-off (ex-GST) | $12,000 |
| Tax saving (27.5%) | $3,300 |
| Total Year 1 benefit | $4,500 |
| Net cost after tax & GST | $8,700 |
Example 3: Three Assets in One Year ($47,000 Combined Investment)
A tradie finances three assets in June 2026, each under $20,000:
| Asset | Price (ex-GST) | Tax Saving (27.5%) |
|---|---|---|
| Work trailer | $14,000 | $3,850 |
| Compressor kit | $9,000 | $2,475 |
| Generator | $16,500 | $4,538 |
| Combined | $39,500 | $10,863 tax saved |
Plus GST credits of $3,950 = $14,813 total Year 1 benefit on a $43,450 (inc. GST) purchase.
These figures are illustrative only. Actual tax savings depend on your taxable income, tax rate, business-use percentage, and the exact timing of asset installation. Always consult a registered tax adviser.
Get Your Custom Quote in 60 Seconds
Tell us what you’re financing and we’ll match you with the right structure and lender. No obligation, no credit check to enquire.
Get a Free Quote →Using the Calculator to See Your Total Cost Before & After Tax
One of the most useful things you can do right now is model the real after-tax cost of your next asset purchase. Our free asset finance calculator lets you:
- Enter the asset price and select chattel mortgage or finance lease
- Add a balloon/residual value if relevant
- See weekly, fortnightly, or monthly repayments instantly
- Compare total interest cost across different loan terms
How to use it for the write-off: Enter your asset price, select a 36-month or 48-month chattel mortgage term, and note the total repayments. Then subtract your estimated tax saving (asset price × your tax rate) and GST credit to arrive at your true net cost. For a $19,000 (ex-GST) asset at 27.5%, the net cost after tax and GST is approximately $11,275 — significantly less than the sticker price.
Open the Calculator →EOFY 2026 Action Checklist for Small Businesses
With EOFY 2025–26 rapidly approaching, here’s what to do before 30 June 2026:
-
Identify assets you genuinely need
Make a list of equipment, vehicles, or technology that would genuinely benefit your business. The tax saving is real, but don’t buy things you don’t need just for the deduction. -
Check the price is under $20,000 (ex-GST)
Each asset must cost less than $20,000 excluding GST (if you are GST-registered). Assets at or above $20,000 go into the general depreciation pool instead. -
Choose chattel mortgage or hire purchase
These are the structures that let you own the asset and claim the write-off. Finance leases and operating leases don’t qualify. -
Apply for finance now — don’t wait
Start early enough for lender assessment, seller checks, documents, settlement and delivery. Timing varies by lender and transaction. Check your likely evidence pathway. -
Arrange delivery before 30 June
The asset must be installed ready for use (or actually used) by 30 June 2026 to be deductible this financial year. Allow time for shipping, installation, or setup. -
Keep your records
Retain the tax invoice, finance contract, and delivery confirmation. If the asset has mixed personal and business use (e.g. a vehicle), keep a logbook to substantiate the business-use percentage. -
Claim on your 2025–26 tax return
Deduct the business-use portion of the asset cost in your next tax return. Also claim the GST credit on your next BAS (if GST-registered). -
Talk to your accountant
Confirm the write-off applies to your specific assets and tax situation. An accountant can also review whether a company tax rate or individual marginal rate applies to maximise the benefit.
EOFY Deadline
Assets must be first used or installed ready for use on or before 30 June 2026 to be deductible in the 2025–26 financial year. Don’t cut it too fine — allow at least 2 weeks for settlement and delivery.
Planning Beyond EOFY if the Proposal Becomes Law
A permanent threshold would support multi-year equipment planning. Until the bill passes, treat that outcome as a scenario rather than an entitlement.
If enacted, businesses could:
- Build an asset lifecycle plan — schedule equipment replacements across 2, 3, or 5 years and know the tax treatment upfront
- Negotiate better deals — suppliers know you’re a serious buyer who isn’t rushing; you can push for better pricing outside of peak EOFY demand
- Stagger purchases across financial years — buy two assets in Year 1 and two more in Year 2 to smooth out cash flow while still getting the write-off each time
- Model scenarios — compare cash flow under the proposed permanent threshold and the law currently in force, then update the model if the bill changes
For growing businesses, this is a genuine structural shift. It transforms the instant asset write-off from an opportunistic EOFY sprint into a year-round investment planning tool.
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Calculate Repayments → Get a No-Obligation Quote →Frequently Asked Questions
The 2026–27 Federal Budget proposes to make the $20,000 instant asset write-off a permanent feature of the tax system for eligible small businesses with aggregated turnover under $10 million. Previously it was extended year by year. Always confirm the latest position via the ATO website or your tax adviser, as legislation must still pass Parliament.
The threshold is $20,000 per eligible asset (excluding GST if you are registered for GST). Each asset is assessed individually, so you can claim multiple assets in the same year as long as each one costs under $20,000.
Yes — but only if the finance structure gives you ownership of the asset. Chattel mortgage and hire purchase both qualify. Finance leases and operating leases do not, because the financier owns the asset.
Eligibility depends on the asset cost, business use and the rules in force for the relevant year. Passenger vehicles can also be affected by the indexed car limit. Whether a ute is outside that limit depends on its design and payload, not the marketing label alone. Confirm the specific vehicle against current ATO guidance.
Eligible assets include trucks and utes, trailers, forklifts, excavators, agricultural equipment, solar batteries, office equipment, IT hardware, medical equipment, hospitality equipment, and most tangible business assets first used or installed ready for use in Australia. Some exclusions apply — see the asset list section above or check the ATO.
Assets costing $20,000 or more are added to the small business general depreciation pool and depreciated at 15% in the first year and 30% each year after that under the simplified depreciation rules. You still get a deduction — just spread over multiple years rather than all at once.
The relevant year is generally determined by when the asset is first used or installed ready for use, but the threshold and eligibility rules must be law for that year. Do not rely on the permanent proposal until it is enacted.
No. You claim the actual cost of the asset (business-use portion), not a fixed $20,000. If your asset costs $8,000, you claim $8,000. The $20,000 is simply the maximum per-asset threshold for the full immediate deduction.
GST treatment depends on registration, creditable purpose and the extent of business use. If a GST credit is available, the depreciable cost is generally reduced by that credit. Confirm the calculation with a registered tax adviser.
For the 2025–26 income year, the relevant deadline was 30 June 2026. For a later year, confirm the law in force and the date the asset was first used or installed ready for use.
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Estimates only. Actual finance subject to lender approval. This is general information, not financial or tax advice. Confirm the current write-off status with the ATO or a registered tax adviser.