Instant Asset Write-Off & Equipment Finance | DeMarque
Most pages you will find on the instant asset write-off open with a confident “$20,000!” and move straight to the sales pitch. As at late July 2026 that headline is doing a lot of work it hasn’t earned, and a business making a real purchase decision deserves the unvarnished version.
Here it is: the $20,000 instant asset write-off applied to eligible assets first used or installed ready for use by 30 June 2026. In the 2026-27 Budget on 12 May 2026 the Government announced it would make the $20,000 limit permanent from 1 July 2026 — and at the time of writing that measure is before Parliament and not yet law. Anything you buy today falls in the 2026-27 income year, which puts it on the announced-but-unlegislated side of that line.
That is not a technicality. It is the difference between a deduction you can plan around and one you are assuming.
Why the Answer Is Split in Two
The concession has always been a moving target. Its limit has been legislated in blocks — a period, a threshold, then another period and another threshold — rather than set permanently, so the question “what is the instant asset write-off?” has never had a single answer. It has only ever had an answer for a given income year.
The block that ran from 1 July 2023 to 30 June 2026 carried the $20,000 limit for small businesses with an aggregated turnover under $10 million that use the simplified depreciation rules. That block has now closed.
The measure intended to replace it — and to stop the ratcheting by making the limit permanent — is contained in the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026. As at 28 July 2026 that bill had been introduced and read a first time on 25 June 2026, with the second reading moved the same day. It had not passed the House of Representatives. It has also been referred to the Senate Economics Legislation Committee, which took submissions until 16 July, held a public hearing on 27 July, and is not due to report until 13 August 2026.
The ATO’s own guidance on the measure is unambiguous about its status, stating in bold that it is not yet law. And the ATO’s published table of write-off limits by period currently has no row at all for assets first used or installed ready for use from 1 July 2026 — the table simply stops at 30 June 2026.
So the honest position for a purchase made this week is: the intended treatment is well signposted, the legislative outcome is not yet certain, and nobody — including us — can tell you today what the final 2026-27 threshold will be.
What This Means If You’re Buying Now
It means the write-off should not be the reason you buy the asset.
That sounds obvious, and it is routinely ignored. Every year businesses bring purchases forward, and finance them, on the strength of a deduction — and a deduction is not a rebate. Even at its most generous the write-off reduces taxable income; it does not hand back the purchase price. A $18,000 machine bought purely for the deduction still costs a business the great majority of $18,000 in cash or repayments, and if the equipment isn’t needed, that is simply a worse outcome with a tax-flavoured explanation.
Where the timing genuinely matters is at the margin: you were buying the asset anyway, the business case stands on its own, and the question is only when. That is a real conversation, and it is one to have with your accountant now rather than in June — because if the measure does pass in the form announced, the planning question changes shape entirely. A permanent limit removes the annual scramble that has driven so much rushed EOFY spending.
The Mechanics That Aren’t in Dispute
Whatever threshold lands, the way the concession is applied has been stable for years, and these are the rules that catch people out.
The limit is per asset, not per business. Multiple qualifying assets can each be written off in the same year. There is no annual cap on the number.
The cost is tested before any trade-in. If you buy a $24,000 machine and trade in your old one for $6,000, the asset’s cost for the test is $24,000, not the $18,000 you actually paid. This is the single most common misunderstanding we see, and it converts a lot of “that’ll qualify” into “that won’t”.
Second-hand assets are not excluded. New and used both count, which matters more in equipment than in most categories — see our guide to second-hand equipment finance for how lenders treat used assets.
Business-use portion and the cost test are two different things. You claim the business-use share of the asset, but the entire cost has to fall under the limit. A ute costing $38,000 used 60% for business does not qualify on its $22,800 business share — it fails outright, because the asset costs $38,000. Conversely, a $7,000 laptop used 80% for business qualifies, and you claim $5,600.
Passenger vehicles have their own ceiling on top. The car limit caps how much of a passenger vehicle’s cost can be depreciated at all. It is $69,674 for 2025-26 and rises to $69,883 from 1 July 2026. Anything above the limit is not claimable under any provision — on a $90,000 car, the excess above the limit simply never becomes a deduction. The GST credit is capped in step, at one-eleventh of the car limit. Note the car limit applies to passenger vehicles rather than to every vehicle: utes and vans designed to carry a one-tonne-plus payload, or nine or more passengers, sit outside it, which is why the commercial vehicle question is usually a different conversation — covered in business vehicle finance.
Assets over the limit aren’t lost, they’re pooled. An asset at or above the write-off limit goes into the small business pool and is deducted at 15% in the first year and 30% each year after. It is slower, not gone. And where the pool balance itself falls below the write-off limit at year end, the balance can generally be written off.
Where Finance Structure Comes Into It
This is the question we’re actually asked: if I finance the asset, can I still claim it?
The concession is about how an asset is treated for tax, not about how it was paid for. The ATO’s guidance on the instant asset write-off is silent on financing method — it does not carve financed assets in or out.
What does matter is the general principle underneath, which is ownership. Under a chattel mortgage or hire purchase, the business takes ownership of the asset from the point of purchase, which is why assets funded this way are generally treated as held by the business for depreciation purposes. Under a lease or rental, the financier owns the asset and the business is paying for its use — so the deduction you are looking at is generally the payments themselves, not depreciation on an asset you don’t own. The two paths are not better and worse; they are different, and they interact with the write-off differently. Our comparison of chattel mortgage vs finance lease vs rental sets out the structures side by side.
The practical consequence is that structure choice should follow the tax position your accountant wants, not the other way around — and that a broker who recommends a structure without asking what your accountant thinks is guessing. Tell us what the accountant says and we’ll fund to it.
”Installed Ready for Use” Is the Deadline That Bites
The test has never been the date you paid, or the date you signed the finance contract. It is the date the asset is first used or installed ready for use.
For a laptop that distinction is academic. For a piece of plant that needs delivery, rigging, commissioning and a compliance sign-off, it is the whole ball game — and it is why late purchases fail. Equipment ordered in the second week of June, invoiced in June, delivered in July and commissioned in August was not installed ready for use in the earlier year, however early the invoice is dated.
Finance timing feeds directly into this. Indicative equipment finance outcomes are often available within 24 to 48 hours, but settlement depends more on paperwork and asset verification than on credit — private sales, older assets and newer ABNs all add steps. If a deadline is doing real work in your decision, the finance needs to start well before the asset does.
What We’d Tell a Client This Week
Buy the asset if the business case stands up. Get your accountant’s read on the 2026-27 position before you assume a deduction, and get it in writing if the number is material. Watch for the committee report due 13 August 2026 and the bill’s passage through both houses after that. And structure the finance around the tax outcome your accountant is aiming at.
If you want the wider picture of how these facilities work — terms, deposits, balloons, what drives pricing — start with our equipment finance page, and our breakdown of equipment finance rates and fees.
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Instant asset write-off position and car limit figures last checked against ATO guidance, and the bill’s status against the Parliament of Australia record, on 28 July 2026. The permanence measure was still before the House of Representatives at that date. This information is general in nature and does not constitute financial, tax or accounting advice. DeMarque Finance is a finance brokerage, not a tax agent or financial adviser — confirm your position with your accountant or the ATO before making a purchase decision that depends on it.
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