The $20,000 Instant Asset Write-Off Ends 30 June 2026. The Third Rate Rise in Three Months Makes Acting Now Critical.
Category: Business Finance & Tax Strategy | Read Time: 11 minutes | Updated: May 2026
Write-off threshold: $20,000 per asset (ex-GST) | Deadline: 30 June 2026 | Reverts to: $1,000 from 1 July 2026
RBA cash rate: 4.35% (hiked 5 May 2026) | Next RBA decision: 15 to 16 June 2026 | Westpac forecast: two more hikes possible in 2026
Two deadlines have now collided for Australian business owners, and together they create an urgency that is impossible to ignore.
The first deadline: the $20,000 instant asset write-off expires on 30 June 2026. From 1 July, the threshold drops to just $1,000. That is not a typo. The deduction you can claim immediately on an eligible asset falls from $20,000 to $1,000. An asset that costs $18,000 and gives you a full $18,000 deduction this financial year will only give you a $1,000 instant deduction next year, with the remaining $17,000 depreciated over several years at 15% in the first year and 30% thereafter.
The second deadline has already passed. On 5 May 2026, the RBA delivered its third consecutive rate hike, taking the cash rate to 4.35%. That completely wipes out the three rate cuts from 2025 and brings the cash rate back to the November 2023 peak. Equipment and vehicle finance rates have risen accordingly. Westpac is now forecasting the possibility of two more hikes before the end of 2026. The next RBA decision is 15 to 16 June, less than two weeks before the write-off deadline.
Put those two together and the maths is straightforward. Finance rates have already risen. They may rise again in June. And your window to get assets delivered, installed and operational before 30 June is now measured in weeks, not months. This is not a drill. This is the last realistic chance to act.
What the Instant Asset Write-Off Actually Is
The instant asset write-off allows eligible small businesses to claim an immediate tax deduction for the full cost of a depreciating asset, rather than depreciating it over several years. The current threshold is $20,000 per asset (excluding GST if your business is registered for GST). It applies to both new and second-hand assets. There is no cap on the number of assets you can claim, provided each individual asset costs less than $20,000.
This measure was originally increased from $1,000 to $20,000 in July 2023 and has been extended annually since then. The most recent extension, confirmed on 4 April 2025 and now law, runs until 30 June 2026. There has been no announcement of a further extension beyond that date. Unless the government legislates another extension, the threshold reverts to $1,000 from 1 July 2026.
Who Is Eligible
To claim the instant asset write-off, your business must have an aggregated annual turnover of less than $10 million. You must use the simplified depreciation rules. The asset must be used predominantly (more than 50%) for business purposes. If the asset is used partly for personal purposes, you can only claim the business-use portion. The asset must be first used or installed and ready for use by 30 June 2026.
Eligible business structures include sole traders, partnerships, companies and trusts. If you operate through a company or trust, the turnover test includes the turnover of any affiliated or connected entities. Confirm your aggregated turnover with your accountant before committing to purchases based on the write-off.
The Rule Most Business Owners Get Wrong
The single most common mistake business owners make with the instant asset write-off is assuming that purchasing or paying for the asset before 30 June is enough. It is not. The ATO requires that the asset must be "first used or installed ready for use" by 30 June 2026. Paying an invoice, signing a finance contract, or placing an order before 30 June does not qualify if the asset has not been delivered, set up and made operational by that date.
If you order a piece of equipment on 20 June and it arrives on 3 July, you cannot claim the write-off for the 2025/26 financial year. You will need to wait until the following year, and by then the threshold will have dropped to $1,000.
This is why acting now, in April and early May, is critical. You need time for finance approval (24 to 48 hours through our panel, but potentially longer for complex applications), time for the supplier to deliver the asset, time for installation and setup if required, and a buffer for any delays. The realistic deadline for most business purchases is mid-May to early June at the latest. Leaving it until the last week of June is a recipe for missing the deadline.
Why the Third Rate Rise in Three Months Changes the Equation
The RBA has now hiked rates three times in 2026: February (3.60% to 3.85%), March (3.85% to 4.10%) and May (4.10% to 4.35%). The cash rate is back to 4.35%, exactly where it sat at the peak of the previous cycle in November 2023. The three rate cuts delivered in 2025 have been completely unwound. RBA Governor Michele Bullock described the Middle East conflict as having "complicated things immensely" and "made the trade-off much, much worse."
CBA economists believe the RBA now has room to pause and assess, with their base case being the cash rate held for the rest of 2026 and potential cuts emerging in 2027. However, Westpac has gone further, predicting the possibility of two more hikes in 2026 that would take the cash rate to levels not seen since 2008. The next RBA decision on 15 to 16 June falls less than two weeks before the 30 June write-off deadline.
Equipment finance rates have already risen by approximately 0.50% to 0.75% since November 2025. On a $50,000 chattel mortgage over 5 years, a 0.75% rate increase adds approximately $1,100 in total interest. On a $100,000 loan, it adds approximately $2,200. If the RBA hikes again in June, rates will climb further still.
The bottom line: the rate you can lock in today is already significantly higher than what was available six months ago, and it may be the lowest rate you see for the rest of 2026. If you are planning to buy equipment or a vehicle before 30 June to claim the write-off, locking in finance now protects you from any further increases and ensures you have the maximum time remaining for delivery and installation.
Which Finance Structures Qualify for the Write-Off
This is where many businesses trip up. Not every finance structure qualifies for the instant asset write-off. The write-off requires your business to own the asset. Only structures where ownership transfers to you at or before settlement qualify.
Chattel Mortgage: YES, Qualifies
A chattel mortgage is the standard structure for claiming the instant asset write-off. You own the asset from day one. You claim the full GST on your next BAS. You claim the instant asset write-off (if the asset is under $20,000 excluding GST) in your 2025/26 tax return. You deduct the interest over the loan term. This is the structure that delivers the maximum first-year tax benefit for eligible assets.
Hire Purchase: YES, Qualifies
Under a hire purchase agreement, ownership transfers to you at the end of the agreement (or earlier depending on the terms). The ATO generally treats the hirer as the owner from the start for tax purposes under the simplified depreciation rules, which means the instant asset write-off is available. Confirm the specific treatment with your accountant.
Finance Lease: NO, Does Not Qualify
Under a finance lease, the lender owns the asset throughout the lease term. Because you do not own the asset, you cannot claim the instant asset write-off or depreciation. Your deduction is the rental payment itself, spread over the lease term. If your primary goal is to claim the write-off before 30 June, a finance lease is the wrong structure.
Operating Lease / Rental: NO, Does Not Qualify
Same reason as a finance lease. The lessor owns the asset. No ownership means no write-off.
Novated Lease: NO, Does Not Qualify for the Business
A novated lease is an employee salary packaging arrangement, not a business ownership structure. The employee does not own the asset. The employer does not own the asset. The write-off does not apply. However, novated leases have their own substantial tax benefits through the FBT exemption on eligible EVs and pre-tax salary deductions.
What You Can Claim: Practical Examples
The $20,000 threshold applies per asset. You can claim multiple assets in the same financial year, provided each individual item costs less than $20,000 (excluding GST). Here are some real-world examples by industry.
Tradies and Construction
A plumber buying a pipe inspection camera for $8,500 can claim the full $8,500. An electrician buying diagnostic tools for $12,000 can claim the full $12,000. A builder buying a welder for $6,000 and an air compressor for $9,000 can claim both, totalling $15,000 in immediate deductions. A landscaper buying a commercial mower for $18,000 can claim the full $18,000. None of these are above $20,000, so each qualifies individually.
Transport and Logistics
Most new vehicles and trailers exceed $20,000, so the instant write-off typically does not apply to new utes, trucks or fleet vehicles at full price. However, used vehicles, accessories (toolboxes, canopies, bull bars purchased separately), GPS tracking systems, and dash cameras may fall under the threshold. Assets above $20,000 enter the small business depreciation pool at 15% in the first year and 30% each year thereafter.
Medical and Dental
Sterilisation equipment, treatment chairs, diagnostic instruments and practice technology under $20,000 per item all qualify. A dentist buying a new autoclave for $7,000 and an intraoral scanner for $16,000 can claim both. See our medical equipment loans page for finance options.
Hospitality
Commercial coffee machines, fridges, dishwashers, POS systems and kitchen equipment under $20,000 per item. A cafe buying a commercial espresso machine for $14,000 and a POS upgrade for $5,000 can claim both. See our hospitality and catering loans page.
Agriculture
Farm tools, fencing equipment, irrigation components, small machinery and attachments under $20,000 per item. See our farming and agriculture loans page.
IT and Technology
Computers, laptops, servers, networking hardware, cybersecurity equipment and software licences under $20,000 per item. See our IT and technology loans page.
Assets Above $20,000: What Happens
If an asset costs $20,000 or more (excluding GST), you cannot claim the instant write-off. Instead, the asset enters the small business depreciation pool at 15% in the first year and 30% each year after that. This is still a tax deduction, but it is spread over several years rather than claimed immediately.
For example, a new ute costing $50,000 (excluding GST) does not qualify for the instant write-off. In the first year, the depreciation deduction would be $7,500 (15% of $50,000). In the second year, it would be $12,750 (30% of $42,500). Compare that to an asset costing $19,000 that delivers a full $19,000 deduction in year one. The cash flow advantage of the instant write-off on sub-$20,000 assets is substantial.
If you are considering a purchase that sits near the $20,000 threshold, check whether the cost excluding GST falls below or above the line. A $21,890 purchase including GST has a GST-exclusive cost of $19,900, which is under the $20,000 threshold and qualifies for the write-off. A $22,000 purchase including GST has a GST-exclusive cost of $20,000, which is at the threshold and does not qualify (the rule is "less than $20,000," not "equal to or less than"). This is worth checking with your accountant before purchasing.
Financing the Purchase: Why It Does Not Prevent the Write-Off
A common misconception is that you need to pay cash for the asset to claim the instant write-off. This is not true. You can finance the purchase through a chattel mortgage or hire purchase and still claim the full write-off, provided the asset is under $20,000 (excluding GST), your business is eligible, and the asset is first used or installed ready for use before 30 June 2026.
In fact, financing the purchase and claiming the write-off simultaneously can create a powerful cash flow outcome. You buy the asset with minimal or no cash outlay (many lenders offer no-deposit chattel mortgages for new assets from dealers). You claim the full cost of the asset as an immediate tax deduction, reducing your taxable income and your tax payable for the year. And you spread the cost of the asset across manageable monthly repayments over 2 to 5 years. The tax saving from the write-off often exceeds the interest cost of the finance in the first year, making the net cost of acquiring the asset negative in year one.
The Real Timeline: Working Backwards From 30 June
If you want to claim the write-off this financial year, here is the realistic timeline working backwards from the deadline.
30 June 2026: The asset must be first used or installed ready for use by this date. This is the hard deadline. No exceptions.
Mid-June: The latest realistic point to take delivery of equipment that requires no installation. For equipment that requires installation, setup or calibration, you need delivery by early June at the latest to allow time for installation before 30 June.
Late May to early June: The latest point to have finance approved and the purchase order placed, allowing time for the supplier to deliver.
Early to mid-May: The latest point to start the finance application, particularly for low-doc applications, complex purchases, or assets from suppliers with lead times of 2 to 4 weeks. This is where you are right now. The window is closing.
Right now (early May): The ideal time to act. You have just enough time for finance approval, delivery and installation. The RBA has already hiked three times this year and may hike again on 15 to 16 June. Every day you wait narrows the window.
What Happens From 1 July 2026
Unless the government announces a further extension, the instant asset write-off threshold drops to $1,000 from 1 July 2026. At the same time, Payday Super takes effect from 1 July 2026, requiring employers to pay superannuation at the same time as salary rather than quarterly. This adds to the cash flow burden on small businesses and makes it even more important to maximise every available deduction before the financial year ends.
There has been no announcement of an extension beyond 30 June 2026. The government has extended the write-off annually since 2023, but waiting for a potential announcement is a risky strategy that could leave you without the deduction if no extension materialises. The safest approach is to treat 30 June 2026 as the hard deadline and act accordingly.
Claim the Write-Off Before the Deadline
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Frequently Asked Questions
What is the instant asset write-off threshold for 2025/26?
The threshold is $20,000 per asset (excluding GST for GST-registered businesses). This applies to eligible depreciating assets first used or installed ready for use between 1 July 2025 and 30 June 2026. From 1 July 2026, the threshold is scheduled to drop to $1,000.
Does the write-off apply per asset or in total?
Per asset. You can claim the write-off on multiple assets in the same financial year, provided each individual asset costs less than $20,000 (excluding GST). There is no cap on the number of assets.
Can I finance the purchase and still claim the write-off?
Yes. You can finance the asset through a chattel mortgage or hire purchase and still claim the full instant write-off. The deduction is based on the cost of the asset, not how you pay for it. Financing the purchase and claiming the write-off simultaneously can create a powerful cash flow outcome where the tax saving exceeds the first-year interest cost.
Can I claim the write-off on a finance lease?
No. A finance lease does not transfer ownership to you. The lender owns the asset. Because you do not own the asset, you cannot claim the write-off or depreciation. If claiming the write-off is your goal, a chattel mortgage is the correct structure.
Does the asset need to be new?
No. Both new and second-hand assets qualify for the instant asset write-off, provided the asset costs less than $20,000 (excluding GST) and is first used or installed ready for use by 30 June 2026.
What if my asset costs exactly $20,000?
The rule is "less than $20,000," not "equal to or less than." An asset costing exactly $20,000 (excluding GST) does not qualify. It enters the small business depreciation pool instead. If your purchase is at or near the threshold, check the GST-exclusive cost carefully with your accountant.
Will the write-off be extended beyond 30 June 2026?
There has been no announcement of a further extension. The government has extended the write-off annually since 2023, but there is no guarantee it will be extended again. Waiting for a potential announcement is a risky strategy. The safest approach is to treat 30 June 2026 as the hard deadline.
What is the latest I can buy to still qualify?
The asset must be "first used or installed ready for use" by 30 June 2026. Simply purchasing, ordering or paying for the asset before 30 June is not enough. You need time for finance approval, delivery and installation. The realistic deadline for most purchases is mid-May to early June. Leaving it until the last week of June risks missing the deadline if there are any delivery or installation delays.
What happens to assets above $20,000?
Assets costing $20,000 or more enter the small business depreciation pool. They are depreciated at 15% in the first year and 30% each year after that. The deduction is spread over several years rather than claimed immediately. This still reduces your tax, but the cash flow benefit is smaller and slower.
How does the latest RBA rate rise affect me?
The RBA hiked the cash rate to 4.35% on 5 May 2026, the third consecutive hike this year. Equipment and vehicle finance rates have risen approximately 0.50% to 0.75% since November 2025. On a $50,000 chattel mortgage over 5 years, a 0.75% increase adds approximately $1,100 in total interest. The next RBA decision on 15 to 16 June falls less than two weeks before the write-off deadline. Westpac is forecasting the possibility of further hikes. Locking in finance now protects you from any additional increases.
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