Quick answer
The cap for 2025–26 sits at $20,000, per the ATO, for qualifying small businesses. An item under that figure can be claimed in full that year — provided it's been put to work, or set up and good to go, before 30 June. The order date and the finance date don't decide the year; readiness does. Funding the purchase with finance usually won't block a claim, though your accountant should confirm.
Key points
- Cap for 2025–26: $20,000, tested item by item.
- It has to be operating, or set up and good to go, inside the financial year.
- Ordering or signing finance before 30 June isn't enough on its own.
- Buy because the business needs it, not just for the deduction.
What is the instant asset write-off?
Normally a business claims an asset bit by bit over its working life. This concession lets a qualifying small business claim the whole price in one go — in the year the item starts operating or is set up and good to go. For 2025–26, the cap is $20,000, tested against each item, according to the ATO.
Think of it as bringing a deduction forward. Add it all up over the years and you claim much the same total; the difference is how early the tax relief arrives, which can make a real difference to cash on hand.
This guide isn’t tax advice. It’s a practical look at how the timing rules interact with buying and financing equipment. Your accountant should confirm eligibility and treatment for your business.
The rule that catches people out
What decides the year is the date the item is operating, or set up and good to go. It isn’t the date you:
- placed the order
- paid a deposit
- signed finance documents
- received an invoice
Illustrative example: a business orders a $16,000 compressor on 10 June, signs equipment finance on 15 June, and the compressor arrives and is installed on 4 July. For tax, it was first installed ready for use in the new income year — so the write-off generally falls into that year, not the one ending 30 June.
The practical lesson: if you want an asset in a particular income year, plan for delivery and installation, not just the purchase.
Why June is the riskiest month to buy
Everyone has the same idea at once. In June:
- suppliers run out of popular stock
- delivery and installation slots fill up
- finance providers see a surge in applications
- tradespeople needed to install equipment are booked out
If an asset matters for the current income year, start in April or May. Aim to have it installed with a week or two to spare.
How finance fits in
Financing an asset generally doesn’t stop you claiming the instant asset write-off, but the type of finance matters:
| Finance type | Who owns the asset | General note |
|---|---|---|
| Chattel mortgage | You, from day one | Commonly used where owners want to claim depreciation or the write-off |
| Finance lease | The financier | Lease payments are generally treated differently |
| Operating lease / rental | The financier | Generally not an asset you can write off |
| Hire purchase | Transfers to you at the end | Treatment varies — get advice |
Talk to your accountant before choosing a structure, then tell your finance specialist which one you need. Our equipment finance page explains each in more detail.
The cash flow case for financing write-off assets
Paying cash for equipment before 30 June has a hidden cost: it drains working capital just as end-of-year obligations arrive — BAS, PAYG, super and, for many, a tax bill for the year just finished. Financing the asset keeps cash in the business while the deduction is still available.
Illustrative example (not tax advice):
| Pay cash | Finance | |
|---|---|---|
| Asset cost | $18,000 | $18,000 |
| Cash out in June | $18,000 | A small deposit or first repayment |
| Write-off available (if eligible) | Yes | Generally yes, depending on structure |
| Working capital left for EOFY bills | Reduced by $18,000 | Largely intact |
The total cost of finance is a real expense and should be weighed. But for a business facing a large BAS and super payments in July, keeping cash on hand can be worth more than the finance cost. See EOFY and tax time.
Don’t buy for the deduction alone
A deduction trims taxable income; it doesn’t hand back the purchase price. If a $16,000 asset saves the business roughly $4,000 in tax, it has still cost $16,000. Buying something you don’t need to “save tax” leaves you around $12,000 behind.
The write-off is valuable when it nudges the timing of a purchase you were going to make anyway. Ask:
- Would we buy this in the next six months regardless?
- Will it be installed ready for use before 30 June?
- Do we have the cash or a sensible finance structure?
- Is our accountant comfortable with eligibility?
If the answer to all four is yes, timing the purchase may make good sense.
Assets over the threshold
Anything priced at $20,000 or above misses out on the one-hit claim and is usually written down over time instead — many small businesses drop it into the simplified pool. The ATO’s guide to depreciating assets for 2026 sets out what’s changed. For larger equipment purchases, financing is often even more useful, because the deduction is spread over several years while the asset earns income from day one.
A planning timeline
| When | What to do |
|---|---|
| March–April | Identify needed assets; get quotes; check eligibility with your accountant |
| April–May | Arrange equipment finance; book delivery and installation |
| Early June | Confirm installation dates; keep tax invoices |
| By 30 June | Asset first used or installed ready for use |
| July onwards | Records to your accountant for the return |
Need finance in place before June gets busy? Start your enquiry and tell us the install date.
Records to keep
To support a claim, keep clear records for each asset:
- the tax invoice showing the supplier, date, description and price
- evidence of when the asset was delivered
- evidence of when it was first used or installed ready for use — an installation report, commissioning certificate or dated photos
- finance documents, if financed
- the business use percentage, if the asset is also used privately
Good records make your accountant’s job easier and protect the claim if it’s ever reviewed.
Business use and private use
The instant asset write-off generally applies to the business-use portion of an asset. If a vehicle or laptop is also used privately, only the business proportion is usually deductible. Keep a logbook or other records that support your business-use percentage — your accountant can advise on what’s needed for each asset type.
Second-hand assets
The write-off isn’t limited to new equipment. Eligible second-hand assets can qualify too, subject to the same cost threshold and timing rules. Buying used equipment can stretch a budget further — just make sure the asset is genuinely ready for use by 30 June, and run a PPSR search to confirm nothing is already financed against it before you pay.
Looking beyond 2025–26
Thresholds and rules for the instant asset write-off have changed many times over the years and may change again. Don’t assume next year’s rules will match this year’s. Check the ATO’s current guidance each year, plan purchases with your accountant, and treat the write-off as a timing bonus on decisions you’d make anyway — not the reason to make them.
Plan the purchase, not just the deduction
The instant asset write-off works best for businesses that plan early and buy what they genuinely need. If you’re timing an equipment purchase, it pays to have the finance lined up before suppliers and installers get busy. Asking what’s possible involves no credit check, and we don’t send your enquiry around to a crowd of financiers — a real person looks at the asset, the timing and your structure and calls you. Please give accurate details of the asset, its cost and the install date. See if your business qualifies.
Frequently asked questions
What is the instant asset write-off threshold for 2025–26?
$20,000 for qualifying small businesses in 2025–26, measured against each item separately rather than the total spend.
When does an asset count for the instant asset write-off?
In the year it starts operating, or is set up and good to go. Gear that only gets delivered and hooked up in July usually belongs to the following year.
Can I claim the write-off on financed equipment?
Financing generally doesn't stop a claim, but the treatment depends on the type of finance and your circumstances. A chattel mortgage is treated differently from a lease. Ask your accountant.
Is the write-off worth buying equipment I don't need?
No. A deduction reduces taxable income; it doesn't refund the purchase price. You're still out most of the cost after tax.
What about assets costing $20,000 or more?
Those are generally depreciated, often through the small business simplified depreciation pool. Your accountant can explain how that works for you.