Estimate the decline in value of an eligible business asset and see whether an immediate write-off or depreciation method may apply to the business-use portion.
The tax treatment of a business asset depends on its cost, when it is first used or installed ready for use, the entity’s eligibility for simplified depreciation and the extent the asset is used for a taxable purpose. Assets that are not immediately deductible are generally written off over time under the applicable depreciation rules.
From 1 July 2026, the $20,000 instant asset write-off is permanent for eligible small business entities with aggregated turnover of less than $10 million, subject to the statutory conditions. Eligible assets costing less than $20,000 can generally be deducted immediately for their business-use portion. Assets costing $20,000 or more are generally dealt with through the small business simplified depreciation pool where that regime applies.
Clarify immediate write-offs, depreciation methods, business use and asset thresholds.
From 1 July 2026, the instant asset write-off threshold is permanently set at $20,000 for eligible small business entities with aggregated turnover of less than $10 million. Eligible assets must cost less than $20,000 and satisfy the applicable conditions. The threshold applies on a per-asset basis.
The concession generally applies to eligible small business entities using the simplified depreciation rules and meeting the aggregated turnover test. For the current measure, the turnover threshold is less than $10 million.
If a small business uses the simplified depreciation rules, an asset at or above the threshold is generally allocated to the small business pool rather than immediately written off, subject to exclusions and special rules.
Both are methods for calculating an asset’s decline in value over its effective life. Prime cost generally spreads deductions more evenly, while diminishing value generally produces larger deductions earlier in the asset’s effective life.
Not generally. The deduction is reduced to reflect the non-taxable or private-use portion. Good records of business use are important where an asset has mixed use.
We can help determine the correct tax treatment, effective life, business-use percentage and depreciation method for your assets.
