Current thresholds, eligible assets, and how Australian businesses can claim an immediate deduction on financed equipment.
The instant asset write-off allows eligible Australian businesses to immediately deduct the full cost of eligible assets in the financial year they are first used or installed ready for use. Instead of depreciating an asset over several years, you claim the entire amount in one tax return.
This concession is designed to encourage small and medium businesses to invest in equipment, vehicles, and technology by bringing forward the tax benefit. For businesses financing assets through chattel mortgages or hire purchase, this can dramatically improve first-year cash flow.
The instant asset write-off threshold has changed multiple times over recent years. Here's a summary of the key periods:
| Period | Threshold | Eligible Businesses |
|---|---|---|
| 2020–2022 (Temporary Full Expensing) | No limit | Turnover < $5 billion |
| 2023–24 | $20,000 per asset | Turnover < $10 million |
| 2024–25 | $20,000 per asset | Turnover < $10 million |
| 2025–26 (expected) | $20,000 per asset* | Turnover < $10 million |
*The government has indicated it will extend the $20,000 threshold. Always confirm with the ATO or your accountant before lodging.
Most tangible business assets qualify for the instant asset write-off, including:
For passenger vehicles (cars designed to carry fewer than 9 passengers and 1 tonne), there's a separate cost limit that caps how much you can claim under the instant asset write-off. For 2025–26, this limit is expected to be around $69,674 (indexed annually).
This limit does not apply to commercial vehicles like trucks, utes with a payload over 1 tonne, or vans — these can be claimed in full up to the instant asset write-off threshold (or in full under temporary full expensing when applicable).
Only structures where YOU own the asset qualify — chattel mortgage and hire purchase. Under a finance lease or operating lease, the lender/lessor owns the asset, so you cannot claim the instant asset write-off. You can still claim lease payments as an expense instead.
| Structure | Instant Write-Off Eligible? | GST Credit? | Best For |
|---|---|---|---|
| Chattel Mortgage | ✅ Yes | ✅ Upfront | GST-registered businesses wanting max tax benefit |
| Hire Purchase | ✅ Yes | ✅ Upfront | Similar to chattel mortgage |
| Finance Lease | ❌ No | ❌ No | Businesses wanting off-balance-sheet treatment |
| Operating Lease | ❌ No | ❌ No | Short-term use / regular upgrades |
Yes — as long as you use a structure where you own the asset (chattel mortgage or hire purchase). You claim the full purchase price, not just the deposit or repayments made during the year.
No. The threshold applies per asset, not per business. You can claim multiple assets in the same year, each up to the threshold amount.
If the asset costs more than $20,000, it goes into the small business simplified depreciation pool and is depreciated at 15% in the first year and 30% each year after. However, during periods of temporary full expensing there was no cap.
If you're registered for GST, you claim the GST-exclusive amount. If you're not registered for GST, you claim the GST-inclusive amount.
Use our free calculator to see how the instant asset write-off affects your total cost under chattel mortgage vs other structures.
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