Instant Asset Write-Off Calculator (Australia 2026)

How Australia's Instant Asset Write-Off Works (2025-26)

The Instant Asset Write-Off (IAWO) lets eligible Australian small businesses immediately deduct the full cost of qualifying depreciating assets in the year they are first used or installed ready for use, instead of claiming depreciation over several years. For the 2025-26 financial year, the Australian Government extended the $20,000 threshold to 30 June 2026 via the Treasury Laws Amendment (Tax Incentives and Integrity) Bill. Businesses with aggregated turnover under A$10 million can write off each asset costing less than A$20,000 immediately — and there's no cap on the number of assets, so multiple sub-$20k purchases can each be written off in full.

Last updated: May 2026. Source: Australian Taxation Office (ato.gov.au) — Small business instant asset write-off and the Treasury Laws Amendment (Tax Incentives and Integrity) Bill 2026 extending the threshold through 30 June 2026.

Eligibility Rules — Who Can Claim the $20,000 Write-Off?

Three rules must all be met. (1) Turnover — the business must have aggregated annual turnover of less than A$10 million; this counts your turnover plus any connected or affiliated entities. (2) Asset cost — each individual asset must cost less than A$20,000 (GST-exclusive if you are GST-registered, GST-inclusive if not). (3) Timing — the asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026. Assets costing $20,000 or more aren't completely lost — they go into the small business simplified depreciation pool and are written off at 15% in the first year and 30% in each subsequent year on the diminishing pool balance.

Worked Example — $15,000 Equipment vs $25,000 Equipment

Sarah runs a plumbing business with $1.8 million turnover. She buys a $15,000 ute toolbox + tools (commercial vehicle, no car limit). Because turnover is under $10M and the asset cost is under $20K, she writes off the full $15,000 in 2025-26. At a 25% small business company tax rate, she saves $3,750 in tax that year.

If she had bought a $25,000 piece of equipment instead, the IAWO doesn't apply per asset (over the $20K threshold). Instead, the full cost goes into the small business pool. Year 1 deduction = 15% × $25,000 = $3,750 (tax saved $937 at 25%); Year 2 = 30% × $21,250 = $6,375; Year 3 = 30% × $14,875 = $4,463. The total deduction matches over time — but the IAWO compresses the cash-flow benefit into Year 1.

Common Traps and Strategies

Three traps catch business owners every year. First, the car cost limit for passenger vehicles ($69,674 in 2025-26) caps the deduction even when IAWO doesn't apply — utes and commercial vehicles over 1 tonne payload are exempt. Second, the asset must be installed ready for use before 30 June 2026, not just paid for or ordered — backorders and delayed deliveries can push you out of eligibility. Third, the threshold is per asset, not per invoice: if you buy two $12,000 monitors on one invoice, both qualify; if you buy one $24,000 server, neither IAWO option applies and it goes to the pool. Smart strategy: split asset purchases across financial years, and time installation before 30 June where possible to bring deductions forward.

What's Changing in 2026-27?

As at May 2026, the $20,000 IAWO threshold is legislated only through 30 June 2026. Whether the Treasurer extends it for 2026-27 will be confirmed in the May 2026 Budget — historically, the threshold has bounced between $1,000 (default), $20,000 (current), $25,000, $30,000, $150,000 (during COVID Temporary Full Expensing), and back. If no extension is passed, the threshold reverts to A$1,000 from 1 July 2026 and most assets must be depreciated through the small business pool. Plan capital purchases for the 2025-26 window before 30 June 2026 to lock in the higher threshold.