Small business instant asset write-off to be extended for 2025–26

A bill amending the Income Tax (Transitional Provisions) Act 1997 to extend the $20,000 instant asset write-off until 30 June 2026 has been introduced to parliament.

As part of the 2025 Federal Budget, an increase in the small business instant asset write-off threshold was announced to support small businesses.

The Bill proposing to increase the instant asset write-off threshold under the Income Tax (Transitional Provisions) Act 1997 has been introduced to parliament.

The amendments will allow an immediate deduction for eligible assets including second element costs and low-value asset pools.

Eligibility criteria

The following conditions must be satisfied in order to be eligible for the instant asset write-off:

The asset must be first installed or ready to use between 1 July 2025 and 30 June 2026
The asset must cost less than $20,000
The annual aggregated turnover of the business must be less than $10 million.

The $20,000 threshold will apply on a per asset basis, so you can instantly write off multiple assets.

Other matters

Second element costs

A small business entity can also immediately deduct an amount included in the second element of a depreciating asset’s cost (for example, an amount spent on improving or transporting a depreciating asset), provided that the eligibility requirements are met.

Low-value pools

The balance of the general small business pool may also be deductible, if at the end of an income year, the balance of the pool is less than $20,000. For this purpose, the balance of the pool is determined prior to calculating any deductions in respect of the pool for the income year.

Future prospects

The cost (business portion) of any assets you purchase, start to hold or have ready to use (installed) between 1 July 2025 and 30 June 2026 can be fully deducted if it is below the $20,000 threshold. This deduction, which is currently available for the 2024–25 income year, may also become available for the 2025–2026 income tax return, after the Bill receives parliamentary approval.

The amendments also extend deferral of the 5-year "lock-out" rule for the small business simplified depreciation rules until 30 June 2026, therefore you can continue to re-enter the simplified depreciation system if you choose to opt out at some point before 30 June 2026.

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Please free to contact our office should you have any queries in relation to these announcements.