There is a distinction most content on this subject collapses, and it has real consequences if you are timing equipment purchases.
Announced is not the same as law.
What was announced
In the 2026-27 Federal Budget on 12 May 2026, the Government announced it would permanently set the instant asset write-off at $20,000 for small businesses with aggregated turnover under $10 million, from 1 July 2026 — removing the sunset clause and the annual renewal cycle.
If legislated, eligible businesses can immediately deduct the full cost of eligible depreciating assets costing less than $20,000, first used or installed ready for use in the income year.
Why the distinction matters
The legislated statutory default, absent new law, is $1,000.
That is the difference between deducting a $15,000 asset immediately and depreciating it over several years. On a business at the 25% company tax rate, that is roughly $3,750 of tax deferred rather than claimed — and a cash flow difference in the year you buy.
Budget announcements are not law until they pass both houses. Measures have been announced and later amended, delayed, or not proceeded with.
Verified as at 8 August 2026: the enabling legislation — the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 — had not passed Parliament, and the ATO’s own guidance states the measure is not yet law. The standing threshold of $1,000 applies until it does.
Before timing any purchase on the $20,000 threshold, confirm the current position with the ATO or your accountant. Do not rely on this page, a supplier’s advertising, or an article written in May.
For context on why this matters: the previous $20,000 threshold covering 1 July 2025 to 30 June 2026 was legislated, via the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025. That one is law. The permanent version is a separate bill and a separate question.
Suppliers have a commercial interest in the higher number being true. Your accountant does not.
How it works, if the threshold applies
Per asset, not per year. The threshold applies to each individual asset. Three assets at $18,000 each can all qualify.
GST treatment. The cost is measured excluding GST if you are registered for GST, or including GST if you are not.
First used or installed ready for use. Ordering is not enough. The asset must be installed and ready for use in the income year you claim it.
Aggregated turnover. Under $10 million, aggregated across connected and affiliated entities — the same tracing concept as payroll tax grouping.
Second-hand assets generally qualify under the small business simplified depreciation rules.
Cars are subject to the car limit for depreciation purposes. Vehicles designed to carry one tonne or more are generally not — relevant for most work utes.
The mistake worth avoiding
Do not buy something you do not need for the deduction.
A $15,000 asset you did not need, deducted at the 25% company rate, saves $3,750 of tax and costs you $15,000 of cash. You are $11,250 worse off and holding equipment you did not want.
The write-off improves the timing of a deduction on a purchase you were going to make. It does not make an unnecessary purchase sensible. Every year, businesses spend money in June to “save tax” and are cash-constrained in August.
The correct question is not “can I write this off.” It is “does this asset earn its cost” — and only then, “when is the best time to buy it.”
Interaction with cash flow
Even where the deduction is available, remember the cash sequence: you pay for the asset now and receive the tax benefit at lodgement.
In a year where Payday Super compressed the cash cycle from 1 July 2026 and average payment times sit at 24.1 days plus 6.9 days late, that gap matters more than usual.
Businesses funding June capex on the ATO — deferring BAS to buy equipment — should note that general interest charge runs around 10.96%, compounds daily, and stopped being tax-deductible on 1 July 2025.
→ The real cost of ATO tax debt
Where to go next
- Australian Business Compliance Calendar\n- ATO Tax Debt Is One of the Most Expensive Loans in Australia\n- Business Cash Flow in Australia\n- Vehicle and Fuel Costs for Trade Businesses
Sources: Australian Taxation Office; 2026-27 Federal Budget, 12 May 2026; Treasury. Verified 8 August 2026: the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026 had not passed Parliament and the measure was not yet law. This page is general information, not tax advice — confirm the current legislated threshold with the ATO or your accountant before making purchase decisions.