The instant asset write off for 2026 is now a permanent part of Australia's tax system. Eligible small businesses can generally deduct the full cost of each asset under $20,000 in the year it's first used or installed ready for use. The question we hear most is: can I still claim it if I finance the equipment? Usually yes, with the right structure. Here's how the $20,000 instant asset write off works for 2026/27, in plain English.
What is the instant asset write off?
The instant asset write off lets an eligible small business claim the full cost of an eligible asset in one year, instead of spreading it over several years as depreciation.
According to the ATO, the $20,000 threshold is now law, applies from 1 July 2026 and has no end date. The limit applies per asset, so several assets can each qualify in the same year.
Remember, it's a tax deduction, not a cash rebate. It reduces your taxable income by the cost of the asset, so the tax you save depends on your tax rate.
Small business instant asset write off: who's eligible?
| Test | What the ATO says |
|---|---|
| Business size | Aggregated turnover under $10 million |
| Cost of each asset | Less than $20,000 |
| Timing | First used or installed ready for use in the income year you claim it |
| Method | You use the simplified depreciation rules for small business |
Sole traders, partnerships, companies and trusts can all use the instant asset write off if the business meets these tests. It's a business deduction, so employees can't use it for items they buy for work as individuals.
How does the instant asset write off work in practice?
Often eligible:
- tools, generators and site equipment
- laptops, phones and office equipment
- trailers, small machinery and attachments
- second hand assets as well as new.
Watch for:
- Assets costing $20,000 or more. They don't get the instant write off. They generally go into the small business pool instead, depreciated at 15% in the first year and 30% each year after.
- Private use. You can only claim the business use portion.
- GST. If you're registered for GST and can claim the GST credit, the cost for the $20,000 test is generally the amount excluding GST. Confirm this with your accountant.
- Pool balance bonus. If your small business pool balance is under $20,000 at the end of the year, you can generally write off the whole balance.
The timing rule that catches people out
The asset must be first used or installed ready for use in the year you claim it. Ordering or paying for it isn't enough on its own.
| Scenario | Which year? |
|---|---|
| A tool ordered, delivered and used on site in June | This financial year |
| A machine ordered in June that arrives and starts work on 2 July | Next financial year |
| Equipment delivered in June but not installed until July | Next financial year |
Plan purchases around delivery and installation dates, not the invoice date.
Can I claim the instant asset write off on financed equipment?
Often, yes. It depends on who holds the asset for tax purposes.
| How you pay | Who holds the asset | Instant asset write off |
|---|---|---|
| Chattel mortgage | Your business | Can apply if you're eligible |
| Finance lease | The lender | Doesn't apply to your business. Lease payments are generally deductible instead |
| Cash | Your business | Can apply if you're eligible |
With a chattel mortgage, your business owns the asset from day one. That means you can generally claim the write off (or depreciation) and the interest on the business use portion. If you're GST registered, you can usually claim the GST credit in your next BAS. You keep cash in the business while still getting the deduction. Our chattel mortgage vs finance lease guide compares both in detail.
From the broker's desk
“Every June we get calls from business owners who want to buy something 'for the write off' before 30 June. The ones who get it right check two things first. Will it be delivered and working before the end of June? Is it something the business actually needs? A deduction softens the cost. It doesn't make a purchase free.” Dayle Filliponi, Lend It Finance Group
Buying a car for business: does the tax write off apply?
A car costing less than $20,000 can qualify for the instant asset write off, but only for the business use portion. For dearer cars, the ATO's car limit caps what you can depreciate. For 2026/27 that limit is $69,883. Utes and vans designed to carry one tonne or more, or nine or more passengers, generally fall outside the car limit. Check how your vehicle is treated with your accountant before you buy.
Bigger purchases: trucks and machinery
Most trucks, excavators and larger machines cost well over $20,000, so the instant write off won't apply. They can still go into the small business pool, and equipment finance such as a chattel mortgage spreads the cost while the asset earns its keep. See our truck finance guide for more.
Don't buy just for the deduction
A deduction reduces tax on money you've already spent. It doesn't hand the money back. Buy what the business genuinely needs, then use the write off to ease the cost.
One more change for 2026/27
The ATO notes that the five year lockout rule is suspended until 30 June 2027. Normally, if you opt out of the simplified depreciation rules, you can't opt back in for five years. While the suspension runs, you can opt back in sooner. Ask your accountant if that applies to you.
How Lend It helps with equipment finance
We compare 70+ lenders for equipment finance, from a single trailer to a full workshop fit out, with approvals in as little as 24 hours. If your financials aren't up to date, low doc options are available up to $500k, subject to lender criteria.
Getting a quote doesn't affect your credit score. We may run a soft check, and a full credit enquiry only happens when you apply. We're based on the Gold Coast, help businesses Australia wide and we're open 7 days, 8:30am to 6pm.
FAQs
What is the $20,000 instant asset write off?
It lets eligible small businesses with aggregated turnover under $10 million deduct the full cost of each eligible asset under $20,000 in the year it's first used or installed ready for use.
Is the instant asset write off still available in 2026?
Yes. The ATO says the $20,000 threshold is law and applies from 1 July 2026 as a permanent measure.
Can a sole trader use the instant asset write off?
Yes, if the business meets the eligibility tests. It applies to business assets, not items bought as an employee.
Can I claim the write off if I finance the equipment?
Generally yes with a chattel mortgage, because your business holds the asset. Generally no with a finance lease, because the lender holds it.
Does the instant asset write off apply to second hand equipment?
Yes. New and second hand assets can both qualify.
Can I write off a car for my business?
A car under $20,000 can qualify for the business use portion. Dearer cars are depreciated, capped at the car limit. Your accountant can confirm how your vehicle is treated.
Make the most of the write off
Tell us what you're buying and when it needs to be up and running, and we'll line up the finance to suit. Get an equipment finance quote or call 1300 082 012.
Researched with AI assistance, written and checked by Dayle Filliponi.
General information only. This article is not financial, tax or legal advice and doesn't take your circumstances into account. Talk to your accountant or a registered tax agent before you make a decision. Tax rules are current as at 23 October 2026. Lend It Finance Group is a credit representative (535206) of COG Compliance Services Pty Ltd, Australian Credit Licence 384428.