Instant Asset Write Off

Nov 21, 2025 | Uncategorized

Instant Asset Write Off Extended - TSP Accountants & Business Advisors

Instant Asset Write-Off Extended: Your $20,000 Small Business Boost Guide

The Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025 isn’t the catchiest title, but what it contains is music to the ears of small business owners across Newcastle and the Hunter Valley.

The $20,000 instant asset write-off is set to be extended for another year, through to 30 June 2026. This is a significant bonus to most businesses TSP deal with and is one of the most practical tax incentives available, it’s worth understanding how to make the most of it.

What Is the Instant Asset Write-Off?

The instant asset write-off allows eligible small businesses to immediately deduct the full cost of assets costing less than $20,000 (excluding GST) in the year they’re purchased and first used. Instead of spreading depreciation over several years, you get the full tax deduction upfront.

This isn’t just an accounting technicality. It’s a genuine cash-flow benefit that can make a real difference to your bottom line. When you can claim the full deduction in year one rather than depreciating an asset over five or ten years, you’re reducing your tax bill now, when that money might be needed most.

Who’s Eligible for the Instant Asset Write Off?

If your business has an aggregated annual turnover of less than $10 million, you’re eligible. This covers the vast majority of small businesses we work with here in Newcastle and surrounds. Any business that fits this simple criteria may be eligible from tradies and hospitality venues to retailers and professional services firms.

The beauty of this measure is that the $20,000 threshold applies per asset. That means if you need to purchase multiple pieces of equipment, each item under $20,000 can qualify for the instant write-off. A café could claim the full deduction on a new coffee machine, a commercial fridge, and a point-of-sale system, provided each individual item is under the threshold.

Real-World Examples

I’ve seen this incentive used in countless practical ways. Let me share a few examples that might resonate with you.

Use Case #1:

An electrician might purchase a new van full of tools and equipment. Each tool kit, ladder set, and testing device was under the $20,000 threshold, meaning he could immediately deduct the full cost of multiple purchases. The tax saving freed up cash to hire an apprentice sooner than planned.

Use Case #2

A café owner might use the write-off to upgrade an aging commercial coffee machine. The $18,000 machine not only qualifies for the instant deduction but also improved service speed during busy morning rushes. The tax benefit essentially meant the upgrade paid for itself faster than expected.

I’ve also worked with professional services firms upgrading their IT infrastructure. New laptops, monitors, software packages, and office furniture all qualified individually, creating significant tax savings while modernising their workspace. There are so many assets that you might be able to claim through this incentive, I am urging all our clients to get in touch with us as soon as possible to start planning any purchases they might be considering.

The Proposed Extension: What You Need to Know

The current instant asset write-off is scheduled to end on 30 June 2025. The proposed legislation would extend this deadline by 12 months to 30 June 2026. While the Bill still needs to pass Parliament, the Government has indicated strong support for the measure.

Here’s what this means practically: if you’ve been considering equipment upgrades, technology investments, or other capital purchases, you’ll have additional time to plan and execute these purchases while still benefiting from the immediate tax deduction.

The key requirement remains unchanged. The asset must be first used or installed ready for use by the deadline. Simply purchasing an item isn’t enough; it needs to be operational in your business by 30 June 2026 to qualify for that financial year’s deduction.

Planning Considerations for 2025-26

Even though the legislation hasn’t passed yet, smart business owners are already planning. Here’s what I’m discussing with clients right now.

First, take stock of your current equipment and technology. What needs replacing? What upgrades have you been putting off? Create a priority list of capital expenditure needs for the next 18 months.

Second, consider your cash-flow timing. The instant asset write-off is most valuable when you’ll actually have a tax bill to reduce. If your business is having a particularly profitable year, the timing might be perfect. However, if you’re expecting a lower-income year, the tax benefit may be less significant.

Third, think about delivery and installation lead times. Supply chain issues have improved since the pandemic, but some equipment still requires weeks or months for delivery and installation. If you’re planning purchases for the 2025-26 financial year, ordering early ensures you meet the 30 June 2026 deadline.

Common Mistakes to Avoid

In working with small businesses, I’ve seen a few recurring mistakes with the instant asset write-off. Let me save you the headache.

Don’t forget the threshold is per asset, not per invoice. If you purchase a $30,000 item, you can’t split it across multiple invoices to claim the instant write-off. However, if you purchase three separate $10,000 items on one invoice, each qualifies individually.

Remember that second-hand assets are eligible, but they must be used in your business. Buying a second-hand ute for personal use doesn’t qualify, even if it’s under $20,000.

The asset must be used or installed ready for use by 30 June. Simply paying for it isn’t enough. I’ve had clients miss out on the deduction because equipment sat in boxes until July.

What Should You Do Now?

While we’re waiting for the Bill to pass Parliament, there’s no harm in planning ahead. In fact, I’d recommend it.

Start by reviewing your business equipment and technology needs. What capital purchases are you considering for the next 12-18 months? Which of these would benefit from the instant asset write-off?

Next, run the numbers. Calculate the potential tax saving from claiming assets immediately versus depreciating them over time. For many businesses, this could mean several thousand dollars in tax savings that can be reinvested into growth.

Finally, stay informed. Once the legislation passes, there may be specific requirements or clarifications that affect your planning. This is where having a good accountant in your corner makes all the difference.

The Bottom Line

The proposed extension of the $20,000 instant asset write-off to 30 June 2026 represents a genuine opportunity for small businesses to reduce their tax burden while investing in growth. After 42 years serving Newcastle and Hunter Valley businesses, we have not seen these opportunities occur every day.

Whether you’re upgrading equipment, modernising technology, or expanding operations, understanding and utilising the instant asset write-off can deliver real benefits to your business.

The key is planning ahead and acting decisively once the legislation passes. Don’t wait until May 2026 to start thinking about this. The businesses that benefit most from tax incentives are the ones that plan strategically and execute early.

Need help working out if the instant asset write-off is right for your business? Call us on 4926 4155 or email ad***@****************om.au. We’ve been helping Newcastle businesses navigate tax planning for over 42 years, and we’d be happy to discuss your specific situation.

TSP Accountants & Business Advisors – Personal. Trusted. Reliable.

Deidre Molloy | BCom, CA
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