Updated 26 July 2026
In this guide
The instant asset write-off: $20,000 per asset
The headline measure. Businesses with aggregated turnover under $10 million can immediately deduct the business portion of eligible depreciating assets costing less than $20,000. The threshold applies per asset, so several assets under $20,000 can each be written off in the same year. Assets at $20,000 or above go into the small business pool: 15% in year one, 30% each year after.
The $20,000 threshold is legislated only to 30 June 2026. The Government announced on 12 May 2026 that it will make $20,000 permanent from 1 July 2026, and that measure sits in the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026, which is not yet law. Until it passes, the immediate deduction threshold for 2026-27 purchases reverts to $1,000. Confirm the position before committing to a purchase.
The timing rule matters more than the shopping: the asset must be first used or installed ready for use by 30 June of the year you claim. Ordered and invoiced is not enough; a machine sitting at the supplier on 1 July belongs to next year's return. Sequencing purchases around 30 June is standard year-end planning.
The core deduction list
| Category | What's claimable | Watch |
|---|---|---|
| Operating costs | Rent, utilities, insurance, software subscriptions, merchant fees | Apportion any private use |
| Staff costs | Wages, super (timing rules below), training, workers comp | Super must reach the fund to be deductible |
| Motor vehicles | Business-use portion via logbook or cents per km (88c, 5,000km cap for sole traders) | Logbook needs 12 representative weeks |
| Home-based business | Occupancy and running costs where a genuine place of business | CGT main residence implications if claiming occupancy costs |
| Professional fees | Accounting, bookkeeping, legal for business matters | Capital matters may be blackhole expenditure instead |
| Finance | Interest on business borrowings, bank fees, lease payments | ATO interest is no longer deductible (below) |
| Marketing | Advertising, website running costs, sponsorships with commercial benefit | Website builds may be capital |
| Bad debts | Amounts previously returned as income, written off before 30 June | The write-off must actually happen in the ledger |
Timing plays worth real money
- Prepayments. Small businesses can deduct prepaid expenses immediately where the service period is 12 months or less and ends before the end of the next income year. Insurance, rent, subscriptions: paid in June, deducted in full that year.
- Super, the strict one. Employer super is deductible when the fund receives it, not when you pay it. With payday super now running from 1 July 2026, contributions flow every pay cycle, but the June deduction cut-off still turns on receipt by the fund by 30 June.
- Committed bonuses and director fees. Deductible when definitively committed by 30 June, even if paid later; minute it properly.
- Blackhole expenditure. Business-related capital costs that fit nowhere else (some incorporation, restructure and feasibility costs) deduct over five years under s40-880.
The ATO's interest charges left the list. GIC and SIC incurred from 1 July 2025 are not deductible, which changes the maths on carrying tax debt; our tax debt refinancing guide covers when a deductible business loan now beats a payment plan.
The commonly missed ones
Depreciation on existing assets already in the pool. Business insurance premiums paid annually. The business portion of phone and internet. Union and association fees. Bank merchant and payment gateway fees. Fuel tax credits for eligible off-road or heavy vehicle use. COGS adjustments from a proper year-end stocktake. And the small business income tax offset for unincorporated businesses: 16% of the tax on your business income, capped at $1,000, applied automatically when the return is prepared correctly.
Frequently asked questions
What is the instant asset write-off threshold for 2026-27?
$20,000 per asset, for businesses with aggregated turnover under $10 million, first used or installed ready for use by 30 June of the claim year. Important: that threshold is legislated only to 30 June 2026. The measure making it permanent from 1 July 2026 is before Parliament and not yet law, so confirm the position before committing to a 2026-27 purchase.
Can I claim multiple assets under the instant asset write-off?
Yes. The threshold applies per asset, so several qualifying assets under $20,000 each can all be written off in the same year.
Is ATO interest deductible for my business?
No. GIC and SIC incurred on or after 1 July 2025 are not deductible.
When is super deductible?
In the year the super fund receives the contribution. June contributions must reach the fund by 30 June, not just leave your bank account.
Can I deduct expenses paid in advance?
Generally yes if you are a small business and the prepayment covers 12 months or less ending before the end of the next income year.
What records do I need?
Receipts or invoices for every claim, a logbook for vehicle claims, and a stocktake if you carry inventory. Five years retention.
Get every deduction, defensibly
A deduction review before lodgment routinely finds items worth more than the fee. Talk to our small business tax team and we will go through the list against your actual ledger.
Talk to our small business tax teamThis article provides general information only, current at the date of publication, and does not constitute personal tax, legal or financial advice. Consider your circumstances or speak with us before acting. Liability limited by a scheme approved under Professional Standards Legislation.
