Businesses with an annual turnover under AUD 10 million can use the instant asset write-off (IAWO) to immediately deduct the cost of eligible assets under AUD 20,000, including improvements, for assets first used or installed between 1 July 2025 and 30 June 2026, subject to record-keeping and eligibility requirements.
The Australian Taxation Office (ATO) has published a release outlining eligibility for the AUD 20,000 instant asset write-off for the 2025–26 income year on 3 February 2026.
If a business has an aggregated annual turnover of less than $10 million, the instant asset write-off (IAWO) may be used to immediately deduct the business portion of the cost of eligible assets which cost less than $20,000.
Eligible assets must have been first used or installed ready for use for a taxable purpose between 1 July 2025 and 30 June 2026. The $20,000 limit applies on a per-asset basis, allowing multiple assets to be instantly written off.
If an eligible small business has previously claimed a deduction for an asset’s cost under the simplified depreciation rules in an earlier income year, the first improvement cost for that asset can also be immediately deducted. This applies as long as the improvement cost was incurred between 1 July 2025 and 30 June 2026 and is less than the $20,000 limit.
The IAWO can be used for both new and second-hand assets; some exclusions and limits apply. It is only available to eligible small businesses that use the simplified depreciation rules.
Assets costing $20,000 or more can continue to be placed into the general small business pool and depreciated at 15% in the first income year and 30% each following income year.
The usual rules for claiming deductions still apply, and records must be maintained to support the claim.
Maintaining accurate records is important to assist with working out the claim and to provide evidence if required.
Earlier, on 5 May 2025, the ATO released guidance about business eligibility for the AUD 20,000 instant asset write-off for 2024-2025.
