The short answer: the instant asset write-off lets an eligible small business immediately deduct the cost of an eligible asset, rather than depreciating it over years. For the 2025-26 financial year the threshold was $20,000 per asset, and that is law. The bigger question in 2026 is what happens next: the 2026-27 Federal Budget announced the $20,000 threshold would become permanent from 1 July 2026, but at the time of writing that had not yet passed Parliament, and the standing threshold underneath it is only $1,000. For a work vehicle, there is an important catch: most cars cost well over $20,000, so the whole vehicle usually will not qualify for the instant write-off, though some cheaper work vehicles, trailers or equipment can. This is genuinely an accountant conversation, and here is why.
The instant asset write-off is a small business tax concession that brings forward a deduction. Instead of claiming the cost of an eligible asset gradually through depreciation, an eligible business can deduct the full business-use cost in the year the asset is first used or installed ready for use. Less taxable income that year means a lower tax bill that year. According to the ATO, it applies to eligible businesses with an aggregated turnover under $10 million, and the limit applies per asset, so multiple eligible assets can each be written off.
The threshold depends on the financial year, and 2026 is a moment of transition. For 2025-26 the threshold was $20,000 per asset, and eligible assets had to be first used or installed ready for use by 30 June 2026 for that year's claim. Looking forward, the 2026-27 Federal Budget, handed down on 12 May 2026, announced the $20,000 threshold would be made permanent from 1 July 2026. Importantly, that measure had not yet been legislated at the time of writing, and until it passes, the standing legislated threshold is $1,000. So the current-year position needs checking against the ATO before you rely on it.
Usually only cheaper vehicles do, because of the threshold. The instant write-off applies per asset under the threshold, and most cars and utes cost well above $20,000, so the whole vehicle typically will not qualify and instead goes into the business's depreciation rules. A lower-cost work vehicle, trailer, or piece of equipment under the threshold can qualify. There are also separate rules, like the car limit, that cap how much can be claimed on a passenger vehicle regardless. This is exactly the kind of detail where a general article stops being useful and your accountant starts.
You can finance an asset and still claim the write-off, but the tax treatment depends on the finance type and your situation. Businesses often buy vehicles using a chattel mortgage, where the business owns the vehicle from day one and the lender holds a mortgage over it, which can sit alongside depreciation and interest deductions. Whether the instant write-off, depreciation, or other deductions apply, and how, depends on the vehicle's cost, its business use, and current ATO rules. The finance structure and the tax outcome are two separate questions, and both are worth getting advice on before you buy.
Timing is everything with this concession, so plan ahead. For an asset to count in a given financial year, the ATO requires it to be first used or installed ready for use within that year, not merely ordered or paid for. That means allowing time for delivery and setup, and keeping records that show when the asset was ready for use. If you are considering a purchase to make use of the write-off, the sensible sequence is to confirm the current threshold and your eligibility with your accountant first, then sort the finance, then buy with the timing in mind.
Can I write off a car for my business instantly? Usually only if it costs under the threshold, which was $20,000 per asset for 2025-26. Most cars cost more, so the whole vehicle generally will not qualify for the instant write-off and instead falls under depreciation rules, sometimes capped by the car limit. Check with your accountant.
Is the $20,000 instant asset write-off permanent now? The 2026-27 Federal Budget announced it would become permanent from 1 July 2026, but that had not yet passed Parliament at the time of writing, and the standing threshold underneath is $1,000. Confirm the current legislated position with the ATO before relying on it.
Do I have to pay cash to claim the write-off? No. You can finance an eligible asset and still potentially claim, but the tax treatment depends on the finance type and your circumstances, so get advice specific to your situation.
Will the EV fringe benefits tax exemption last? Broadly, small businesses with an aggregated annual turnover under $10 million, for eligible assets used for business purposes and first used or installed ready for use within the relevant financial year. Your accountant can confirm your eligibility.
Written by Ashley, founder of Noma Finance. Before becoming a finance and asset broker, Ashley worked at car dealerships and has personally held every loan type Noma helps with. Noma compares options across a panel of lenders to help people find finance that fits their situation, explained in plain English.
If you are buying a vehicle or equipment for your business, we can sort the finance side and work in with your accountant on the timing. Book a call or apply online.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, credit or tax advice. Tax outcomes depend on your circumstances and current ATO rules, so speak with a licensed tax adviser or accountant before making a decision. Thresholds and legislation change, so the information is current as at the date below only. Check the linked ATO sources for the latest.
Last updated: July 2026.
- Australian Taxation Office, $20,000 instant asset write-off for 2025-26: https://www.ato.gov.au/businesses-and-organisations/small-business-newsroom/20000-instant-asset-write-off-for-2025-26
- Australian Taxation Office, Instant asset write-off for eligible businesses: https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/depreciation-and-capital-expenses-and-allowances/simpler-depreciation-for-small-business/instant-asset-write-off
Sources last checked July 2026.
Written by Ashley, founder of Noma Finance. Before becoming a finance and asset broker, Ashley worked at car dealerships, and has personally held every loan type Noma helps with. Noma compares options across a panel of lenders to help people find finance that fits their situation, explained in plain English.
This article is general information only. It does not take into account your objectives, financial situation or needs, and it is not financial, credit or tax advice. Consider whether it is appropriate for you and seek advice from a licensed professional before making a decision. Tax outcomes for novated leases and chattel mortgages depend on your circumstances, so speak with a licensed tax adviser or accountant. Any figures used are illustrative only.
