Article written by Mark Rogerson
Managing Director
Small Businesses Set to Benefit from Permanent $20K Asset Write-Off
The Federal Budget 2026-27 has announced that the Government intends to permanently extend the $20,000 instant asset write-off for eligible small businesses from 1 July 2026.
Importantly, this is currently a proposed measure only and is not yet law.
What Has Been Announced?
Under the proposal:
- Small businesses with turnover of less than $10 million will continue to have access to the $20,000 instant asset write-off.
- Eligible assets costing less than $20,000 can generally be immediately deducted rather than depreciated over several years.
- Assets costing $20,000 or more will continue to be allocated to the small business simplified depreciation pool.
The Government has also announced that the rules preventing businesses from re-entering the simplified depreciation regime for five years after opting out will continue to be suspended until 30 June 2027.
Why This Matters?
The instant asset write-off has become an important tax planning and cash flow tool for many small businesses.
The proposed permanent extension provides greater certainty for businesses making ongoing investment decisions around:
- Vehicles and equipment
- Technology upgrades
- Tools and machinery
- Office equipment
- Business fit-outs and operational assets
Rather than waiting for annual Budget announcements or temporary extensions, businesses may now be able to plan capital expenditure with more confidence if the measure becomes law.
Key Things to Understand
While the measure is positive, there are still several important considerations:
The Threshold Is Per Asset
The $20,000 threshold generally applies on a per asset basis, meaning multiple eligible purchases under the threshold may potentially qualify.
Timing Still Matters
In most cases, the asset must be installed and ready for use by the end of the financial year to qualify for the deduction in that year.
Business Use Applies
Where assets are used partly for private purposes, only the business-use percentage is generally deductible.
Finance and Cash Flow Should Still Be Considered
While an immediate deduction can assist with tax outcomes, businesses should avoid purchasing assets purely for tax reasons. The commercial benefit and cash flow impact should still be carefully considered.
Our Thoughts
The proposed permanent extension of the instant asset write-off is a welcome announcement for small businesses, particularly after several years of temporary extensions and uncertainty.
However, as with many Federal Budget measures, further detail and draft legislation are still to come, and the final law may differ from the announcement.
Businesses considering significant purchases before year-end should seek advice to ensure:
- The asset qualifies
- Timing requirements are met
- Financing structures are appropriate
- The purchase aligns with broader tax planning and cash flow objectives
If you would like assistance reviewing your year-end asset purchases or business tax planning strategy, please contact our office.
Still got questions?
If you would like assistance reviewing your year-end asset purchases or business tax planning strategy, please contact our office.
Call us on (03) 9802 2533
Email us: info@rogersonkenny.com.au
to talk through your options.
*Disclaimer: This article is general information only and does not take into account your personal circumstances. Always seek professional advice before making financial decisions.*
Mark became a Director at Rogerson Kenny Business Accountants in 2011 and is currently Managing Director. CPA qualified, an SMSF Specialist Advisor™, Mark has a focus on privately held businesses operating in Australia with turnovers above $1m.
