What Is the Instant Asset Write-Off?
The $20,000 instant asset write-off allows eligible small businesses to claim the full cost of an asset as an immediate tax deduction in the year it is first used or installed, rather than depreciating it over several years. The threshold applies per asset, so you can write off multiple qualifying items.
This measure has been extended year by year, but the legislated ongoing threshold is just $1,000. Without further government action, that $1,000 limit applies from 1 July 2026. There has been no announcement of a further extension.
If you're planning to buy tools, equipment or a vehicle under $20,000, the window to claim an immediate deduction closes on 30 June 2026.
Who Is Eligible?
You can access the instant asset write-off if your business has an aggregated annual turnover under $10 million and you use the simplified depreciation rules. The asset must be first used or installed ready for use between 1 July 2025 and 30 June 2026. Both new and second-hand assets qualify, with some exclusions.
What Construction Businesses Typically Write Off
Here are some common assets purchased by builders, tradies and contractors that may qualify:
- Power tools (saws, drills, grinders) - $500 – $5,000
- Scaffolding and safety equipment - $2,000 – $15,000
- Laptops and tablets for site management - $1,000 – $3,000
- Laser levels and surveying equipment - $2,000 – $10,000
- Pressure washers and cleaning equipment - $1,000 – $8,000
- Small trailers - $3,000 – $18,000
- Accounting and project management software (perpetual licences) - $500 – $5,000
What About Assets Over $20,000?
Assets costing $20,000 or more are added to the small business depreciation pool and written off at 15% in the first year and 30% each year after that. This still provides a deduction, but it is spread over several years rather than claimed upfront.
For vehicles, the car limit for the 2025–26 income year applies. If the vehicle costs more than the car limit, the depreciable amount is capped regardless of the write-off threshold.
Strategic Considerations Before You Buy
- Do not buy assets just for the tax deduction. A $20,000 purchase at a 25% company tax rate saves you $5,000 in tax. You still need to spend $15,000. If you do not need the asset, do not buy it.
- Timing matters. The asset must be installed and ready for use by 30 June 2026. Ordering in June and taking delivery in July means you miss the window. Factor in supply chain lead times, particularly for imported equipment.
- Consider your taxable income. If your business is expecting a loss this year, bringing forward a deduction may not be the best strategy. The write-off creates or increases a loss that is carried forward - it does not generate a refund by itself.
- GST treatment. The $20,000 threshold is applied to the GST-exclusive cost if you are registered for GST and claim GST credits. If you are not registered for GST, the threshold applies to the GST-inclusive cost.
What If the Threshold Is Extended Again?
Historically, the government has extended the threshold year by year, but there is no guarantee it will happen again. The 2026–27 Federal Budget (expected in May 2026) may provide clarity, but if you are planning purchases, do not rely on a future extension that has not been legislated.
Key Takeaways
The $20,000 instant asset write-off is one of the most straightforward tax concessions available to small construction businesses. If you need equipment and it costs under $20,000, buying and installing it before 30 June 2026 lets you claim the full deduction this financial year. After that date, the threshold reverts to $1,000 unless parliament acts.
Plan your purchases, check your eligibility, and talk to your accountant before committing. A well-timed purchase can improve your cash flow and reduce your tax bill. A poorly timed one just costs you money.
Disclaimer: This article provides general information only and does not constitute professional tax, legal or financial advice. Every business situation is different. Please consult a qualified adviser before making decisions based on this content.