Quick answer
The instant asset write-off lets eligible small businesses deduct the business-use share of an asset's cost straight away, rather than spreading it over years of depreciation. The ATO lists a $20,000 threshold per asset, applying from 1 July 2023, for businesses with aggregated turnover under $10 million using simplified depreciation. It changes when you claim a deduction, not what the asset costs. Equipment finance can fund the purchase; your accountant should confirm eligibility and timing.
Key points
- Threshold of $20,000 per asset, for aggregated turnover under $10 million
- The asset must be first used or installed ready for use in the income year
- Assets costing $20,000 or more go into the small business pool
- It changes the timing of a deduction, not the price of the asset
- Check eligibility and the current income year's rules with your accountant
What is the instant asset write-off, in plain English?
When a business buys equipment, the tax system usually spreads the deduction for its cost over the years the equipment is used. That’s depreciation. The instant asset write-off is a shortcut for eligible small businesses: instead of spreading the deduction out, you can claim the business portion of the asset’s cost in the year it’s first used or installed ready for use.
The ATO’s instant asset write-off page, last updated in August 2026, lists the threshold as $20,000, applying on or after 1 July 2023, for businesses with an aggregated turnover of less than $10 million that use the simplified depreciation rules.
The single most important thing to understand is this: the write-off changes when you get a deduction, not what the asset costs. You still pay the full price. The write-off brings a tax deduction forward.
The key rules, in one table
| Rule | What the ATO says |
|---|---|
| Who | Businesses with aggregated turnover under $10 million using simplified depreciation |
| Threshold | $20,000, applying on or after 1 July 2023 |
| Per asset? | Yes; it can apply to multiple assets if each costs less than the limit |
| Timing | The year the asset is first used or installed ready for use |
| GST | GST-registered businesses exclude the GST amount when working out cost |
| Assets of $20,000 or more | Go into the small business pool: 15% in the first year, 30% for each year after |
Aggregated turnover includes the turnover of your business and any businesses connected or affiliated with you, so check this with your accountant if you have related entities.
Rules and thresholds can change from one income year to the next. Always check the ATO page and confirm with your accountant for the year you’re buying in.
Common misunderstandings
“The write-off means the equipment is free”
It doesn’t. Suppose a business buys a piece of equipment for a certain amount and is eligible to write it off. The business has still paid for it in full. The deduction reduces taxable income, which may reduce tax payable, but the saving is only a portion of the cost, and only if the business has taxable income to reduce.
“I have to buy before 30 June to benefit”
The deduction is claimed in the income year the asset is first used or installed ready for use. Buying something on 29 June that isn’t installed until August may not give you the timing you expected. Talk to your accountant before making end-of-year purchases.
“Spending money now always saves tax”
Spending a dollar to save part of a dollar in tax leaves the business poorer, unless the asset genuinely earns its keep. The best reason to buy equipment is that the business needs it.
Step 1: decide whether you really need the asset
Start with the business case, not the tax. Ask:
- Will it earn or save money? A faster machine that lets you take on more work, a vehicle that removes hire costs, technology that saves hours each week.
- How long will it last? Its useful life should guide how you fund it.
- What’s the total cost of ownership? Purchase price plus installation, training, maintenance, insurance and running costs.
If the answers stack up, the purchase makes sense on its own. The write-off is then a welcome bonus, not the reason.
Step 2: choose how to pay for it
You have three broad choices, and business.gov.au’s overview of funding options lists the financing forms commonly used for equipment:
- Pay cash. Simple, no finance cost, but it reduces your cash buffer. Check you’ll still have enough working capital afterwards.
- Equipment finance. A chattel mortgage, hire purchase or lease, usually with the equipment as security. Repayments are spread over a term matched to the asset’s life. See equipment finance.
- A broader business loan. An unsecured loan, typically $5,000 to $500,000 sized on turnover, or property-secured lending from $20,000 to $5,000,000, can fund equipment together with installation and working capital. See unsecured business loans.
How does the finance structure interact with the write-off?
Generally, the write-off depends on the cost of the asset and when it’s first used or installed ready for use, rather than on whether you paid cash or borrowed. However, different finance structures can have different tax and GST treatment. A lease, for example, is generally different from owning the asset under a chattel mortgage. This is precisely where your accountant earns their fee. Ask them which structure suits your tax position before you sign.
If you’d like to understand your finance options before that conversation, send a 60-second enquiry. A specialist will call, and asking involves no credit check.
Step 3: time it sensibly
Timing matters for both tax and cash flow.
- Tax timing: the asset needs to be first used or installed ready for use in the income year you want the deduction. Allow for delivery and installation delays, especially near the end of the financial year.
- Cash timing: make sure the purchase, or the first repayments, don’t land at the same time as a big BAS payment or a seasonal low point. Our page on seasonal cash flow gaps helps map those low points.
- Business timing: buy when the asset will start earning, such as before a contract begins or ahead of a busy season.
Illustrative example only. A joinery workshop needs a new edge bander. The owner gets a quote for a model that costs under the threshold, excluding GST, and a second for a more advanced model that costs more. Her accountant explains that the cheaper model could be written off in the year it’s installed, while the more expensive one would go into the small business pool. But the advanced model would let the workshop take on a cabinetry contract it currently turns away. The owner chooses the advanced model on the business case, funds it with equipment finance over a term matching its working life, and treats the tax outcome as secondary.
What about second-hand equipment?
The write-off can apply to second-hand assets as well as new ones, subject to the ATO’s rules. If you’re buying second-hand, especially privately or at auction, search the Personal Property Securities Register first. The PPSR records security interests in personal property such as equipment and vehicles, so a search can reveal whether a lender still holds security over the item.
Vehicles have their own rules
Cars and other vehicles can involve additional limits and conditions in the tax rules, and the business-use percentage matters. Our business vehicle finance page covers the finance side; your accountant should confirm the tax side for your specific vehicle.
A quick checklist before you buy
- Is the business case clear without the tax deduction?
- Has your accountant confirmed eligibility for this income year?
- Will the asset be installed ready for use in time?
- Which finance structure suits your tax and cash flow position?
- Have you budgeted for installation, training and running costs?
- If second-hand, have you searched the PPSR?
- Will your cash buffer still be healthy after the purchase or first repayments?
Ready to equip your business?
The instant asset write-off can be a useful bonus, but the best equipment decisions start with what the business needs and how it will pay. Get those right, and the tax side becomes a pleasant extra rather than the main event.
When you reach out, we won’t check your credit at the enquiry stage. A real person reads your details and calls you; your information isn’t circulated to a crowd of lenders. Please be accurate on the form about the equipment, its cost and your turnover, so the first conversation can focus on the funding structure that fits. Ask about equipment funding.
Frequently asked questions
What is the instant asset write-off threshold?
The ATO lists a threshold of $20,000 applying on or after 1 July 2023 for businesses with aggregated turnover under $10 million that use the simplified depreciation rules. It applies to each asset individually.
Can I use the instant asset write-off for financed equipment?
Generally the write-off depends on the asset's cost and when it's first used or installed ready for use, not on how you paid for it. How a particular finance structure is treated for tax is a question for your accountant.
Does the threshold include GST?
The ATO says businesses registered for GST exclude the GST amount when calculating the asset's cost for these rules.
What happens to assets that cost $20,000 or more?
Under the simplified depreciation rules, the ATO says they go into the small business pool, which depreciates at 15% in the first year and 30% for each year after.
Should I buy equipment just to get a tax deduction?
No. A deduction reduces tax on income you've earned; it doesn't make the asset free. Buy equipment because the business needs it and can afford the cost.