Asset Finance is a useful tool for businesses that want to acquire the assets and equipment needed for day-to-day operations and for growth. Asset, or Equipment Finance, offers value through delivering potential tax advantages and preserving capital and cash flow.
The Instant Asset Write-off scheme applies to small businesses with an annual turnover of less than $10 million. From 1 July 2026, this will be a permanent benefit for all eligible assets that cost less than $20,000 (removing the need to extend the scheme with each budget).
Announced as part of the 2026 Budget, this move makes the previous temporary scheme a permanent and more reliable way for businesses to improve cash flow.
This support is available to almost all businesses. Australian businesses that turnover more than $10 million will continue to be excluded from the scheme.
Eligible, actively trading businesses can deduct the full cost of a depreciating asset that costs less than $20,000, as soon as the asset is installed or first used. This is done using simplified depreciation rules instead of the standard method of spreading depreciation over several years.
Furthermore, if an immediate deduction was claimed for an asset under previous depreciation rules in a prior income year, a second element of that asset can be claimed in the current income year, as long as it is under the $20,000 threshold. The asset can relate to previous financial years back to July 1, 2023.
This ruling applies per asset, allowing a business to write off multiple eligible assets in the same financial year, namely, the year in which the assets are acquired.
The ATO has confirmed that assets valued at $20,000 or more can continue to be allocated to a simplified depreciation pool. These will be depreciated at 15% in the first income year and 30% in subsequent income years. Pool balances under $20,000 at the end of the income year can also be written off. The exclusions can be complex, so it is best to seek advice from a qualified accountant.
As of publication date, some asset types remain excluded from the scheme, such as assets that are leased out more than 50% of the time, capital works, some software and low-value assets.
Car Limit
The car limit for depreciation for the 2025–26 income year is just under $70,000. The car limit is the maximum depreciation expense you can claim for a car. It applies to passenger vehicles designed to carry less than one tonne and fewer than nine passengers.
Vehicles that were purchased for more than $20,000 can place depreciation up to the limit into the small business pool. The car limit does not apply to non-passenger vehicles or to vehicles modified for use by people with disabilities.
Note that if the car limit applies to your vehicle, you can only claim a deduction for the business portion of the car limit. For example, if a business owner buys a new car for $75,000 and they use it for 75 per cent business purposes and 25 per cent personal use, they can claim back 75 per cent of the car limit of that financial year.
If you are considering purchasing a vehicle as part of an end-of-financial-year strategy, or for other reasons, doing your groundwork will help with negotiating a fair price and getting a good deal on vehicle financing.
R&D Tax Offset
Some small businesses use assets for R&D activities, and these assets are excluded from the scheme. General depreciation rules apply here.
The common ways to finance an asset include Chattel Finance, Commercial Hire Purchase, Finance Lease and Operating Lease. Each method has benefits for your business, depending on the asset type and purpose. Our Asset Finance Calculator can assist you in comparing financing terms and options.
Our business equipment loan brokers can help you decide which is the best type of finance for your business.