Instant Asset Write-Off and How You Finance It

The instant asset write-off is $20,000 per asset. That threshold was law for 1 July 2025 to 30 June 2026. The permanent $20,000 threshold from 1 July 2026 was announced on 12 May 2026 and is not yet law.

Eligibility turns on aggregated annual turnover under $10 million and use of simplified depreciation. Most plant our clients buy costs far more than $20,000. For those assets the write-off does not apply at all.

That is the reason this page exists. Most articles on this topic explain the rule and stop. Very few say plainly that the threshold is small, that it is tested asset by asset, and that a tipper or an excavator falls outside it.

Planning capital expenditure takes two things. The tax treatment for the asset you are actually buying, and how the funding decision interacts with it.

Black Mountain Financial finances that plant across the ACT and regional NSW. We have access to 100+ lenders, so a file the banks decline on policy usually has somewhere else to go.

Scope: this article is about finance structuring, not tax advice. We describe the ATO's published position and where to find it. Confirm the treatment of your own purchase with your accountant before you commit.

What is the instant asset write-off in 2026, and who qualifies?

The instant asset write-off lets an eligible small business immediately deduct the cost of an asset under the threshold, rather than depreciating it over years. The threshold is $20,000. Eligibility turns on aggregated annual turnover under $10 million and use of simplified depreciation. (Source: ATO, retrieved 26 August 2026.)

Four points matter more than the headline number:

• It is per asset. A business can write off multiple assets in the same year, provided each one costs less than $20,000. Three $16,000 assets qualify. One $48,000 asset does not.
• Aggregated turnover under $10 million. Aggregation matters if you run related entities. Your accountant will confirm where your group sits.
• The asset must be first used, or installed ready for use, in the income year. Ordering or paying for it is not enough.
• New and second-hand assets are both eligible, with some exclusions.

ATO reference: $20,000 instant asset write-off and the small business newsroom guidance for 2025-26.

Is the $20,000 threshold actually law for this financial year?

No, not yet. The $20,000 threshold from 1 July 2026 was announced on 12 May 2026 and is not law as at 26 August 2026. The $20,000 threshold that was law covered 1 July 2025 to 30 June 2026, under the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025.

That distinction matters, because we are now in FY2026-27. Businesses budgeting capital expenditure this year are planning around a measure that has been announced and not enacted.

We are not saying the measure will fail. Announced measures are routinely legislated, often with effect from the announced start date. We are stating the status accurately, because it changes how you sequence a decision. If a purchase only makes sense with the deduction, your accountant should know the threshold is an announcement, not an enacted provision.

Check the ATO pages above before relying on the FY2026-27 position. They update when a measure passes.

What happens if my asset costs more than $20,000?

Your excavator is not a $20,000 asset. If it costs $20,000 or more, the instant asset write-off does not apply to it. The asset goes into the small business simplified depreciation pool instead. That is 15% in the first year, then 30% each year after that. (Source: ATO.)

This is where most of our clients sit. A $180K tipper. A $450K excavator. A CNC machine, a commercial oven fit-out, a prime mover. None of those are $20,000 assets, and end-of-year urgency does not change that.

So the honest version is this. For major plant you do not get the cost back in one hit. You get 15% into the pool in year one, then 30% of the declining balance after that. Model it that way before you sign anything.

One rule inside the pool is worth knowing. If the pool balance is under $20,000 at the end of the income year, the whole balance can be written off. For a business with a small or nearly-depreciated pool, that is real. For one that just added a $450K machine, it is out of reach for some time.

If you are buying excavators and yellow goods or looking at truck finance, assume the pool, not the write-off, and let your accountant correct you if your circumstances differ.

What does "installed ready for use" actually mean?

The asset must be first used, or installed ready for use, in the income year you want to claim it. Not ordered. Not paid for. Not sitting in a container. This is where end-of-year purchases come unstuck.

Two situations recur.

The machine on the boat. A unit ordered in April, shipped in May, landing in June, cleared and delivered in July. The invoice may be dated in one financial year. The asset may not be available for use until the next. The delivery date is the one that governs, and shipping schedules move.

The fit-out that is finished but not commissioned. A practice fit-out where the equipment is installed, wired and present, but not yet certified, calibrated or commissioned. Whether that counts as installed ready for use is a question of fact, and one for your accountant. The builder's completion date and the tax position are not necessarily the same date.

The finance side is simple. Settlement is when the lender pays the supplier. That is not when the asset arrives, and not when it is ready to work. Structure the deal so those dates are known, not hoped for.

How does the facility type interact with the deduction?

Financing an asset does not stop you claiming a deduction on it, but who owns the asset differs by facility, and that drives the tax treatment. The general shape is below. Your accountant confirms the treatment for your entity.

Chattel mortgage

• Who owns the asset: You own it from the start (business.gov.au)
• General treatment shape: You hold the asset, so depreciation or the write-off sits with you; interest treated separately
• GST input tax credit: Under non-cash accounting, the entire input tax credit on the principal falls in the tax period the invoice is received or a payment is made, whichever is earlier (ATO)

Hire purchase

• Who owns the asset: You pay a deposit, rent the item, and own it on the final payment (business.gov.au)
• General treatment shape: Title passes at the end of the term, so the treatment differs from a lease. Your accountant confirms it for your entity
• GST input tax credit: For agreements entered into on or after 1 July 2012, supplies of goods and credit are fully taxable regardless of whether the interest charge is separately disclosed. Cash-basis recipients can claim as if accounting on a non-cash basis (ATO)

Lease

• Who owns the asset: The financier owns the asset
• General treatment shape: The financier holds title, so the deduction does not sit where it sits under a chattel mortgage. Your accountant confirms it
• GST input tax credit: The ATO guidance cited here covers hire purchase and chattel mortgage. Confirm the lease position with your accountant

Source for ownership definitions: business.gov.au key financial terms.

The practical point: if the asset needs to sit on your balance sheet for the treatment you want, a lease may not get you there. That is a structuring decision, made before the facility is written. Our explainer on the chattel mortgage covers the mechanics, and you can compare the three structures side by side.

This is the part of the deal we care most about. The rate matters. The structure matters as much as the rate, and on an asset purchase driven by a tax outcome, it usually matters more.

Is a deduction worth committing to years of repayments?

A deduction reduces taxable income. It does not refund the purchase price. You are getting back a fraction of the cost, set by your tax rate, while carrying repayments on the full amount for the life of the facility.

Put plainly: a tax deduction is not a discount. Buying an asset you do not need in order to claim one is a bad trade, and it is a trade we talk clients out of every winter.

The question that decides it is whether the asset earns. Does it win work you cannot currently quote? Does it take a subcontracted line in-house? Does it replace a machine costing you downtime? If yes, the tax treatment is a timing benefit on a decision that already made sense. If no, the deduction will not rescue it.

Run the repayment against the revenue the asset generates, not against the deduction. Any term, balloon or repayment figure we discuss is illustrative and deal-dependent, subject to lender assessment. Our equipment finance calculator gives the shape of it, not a quote.

Why is a June decision usually a March decision?

Because four things must happen in sequence before an asset is installed ready for use, and only one is finance. You need a build or delivery slot, finance approval, settlement, then delivery and commissioning. Each has its own lead time.

Build slots on new plant and specialist bodies are the usual constraint. Imported units add shipping and clearance. Custom work, tipper bodies, tanks, refrigeration and fit-outs add fabrication time on top of the base unit.

There is a fifth step that catches profitable, growing businesses. Your bank has funded the last four machines, and its equipment line is now full. So the machine that must be working by 30 June cannot go where the others went. That makes it a lender-selection question, and lender selection carries its own lead time on top of the build slot.

The shape is this. If the asset must be working before 30 June, work backwards from the delivery date, not forwards from today. The businesses that get it right are already talking to a broker in autumn.

What if you have been trading less than two years?

You can still finance equipment. A shorter trading history isn't an automatic no. Some funders will consider a business under two years old where there's strong asset security, an established director track record, or contracted forward income — assessed case by case, and never guaranteed. Lenders outside the major-bank two-year policy assess the asset, the deposit, the industry experience behind the business and the contracts in hand.

A newer business is often the one buying its first serious piece of plant, and the one for whom the tax question is live. The bank's decision is a sensible one for the bank. It is not a verdict on your business.

Our equipment and asset finance panel runs to 100+ lenders. If it's not a fit, we'll tell you early.

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