Instant asset write-off for 2026-27: what is law and what is only announced

The instant asset write-off question every small business is asking this July — “is the $20,000 threshold still on?” — has a two-part answer, because the enacted law and the Government’s announced position currently point in different directions.

The distinction matters because an announced measure — even one introduced as a bill — can change or fail to pass. Everything below separates what Parliament has actually legislated from what has only been proposed.

For 2025-26 the position is settled. Section 328-180 of the Income Tax (Transitional Provisions) Act 1997 applies the write-off threshold as $20,000 (in place of the usual $1,000) for depreciating assets first used, or first installed ready for use, for a taxable purpose between 1 July 2023 and 30 June 2026. The final year of that window was added by Schedule 7 of the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025, which received assent on 4 December 2025.

Eligibility has two limbs. The entity must be a small business entity — it carries on a business and its aggregated turnover is less than $10 million under section 328-110 of the Income Tax Assessment Act 1997, counting connected and affiliated entities — and it must have chosen the simplified depreciation rules in Subdivision 328-D for the relevant years. The threshold is tested per asset, so a business can immediately deduct multiple assets in the same year provided each one comes in under the limit.

In the 2026-27 Budget delivered on 12 May 2026, the Government announced it would make the $20,000 instant asset write-off permanent from 1 July 2026. The accompanying Budget factsheet frames the measure as letting small businesses with turnover under $10 million immediately deduct eligible assets costing less than $20,000, with the Government estimating permanence would save small businesses around $32 million a year in compliance costs.

The implementing legislation is the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026. The Treasurer delivered its second reading speech on 25 June 2026, confirming the $20,000 threshold would continue to apply on a per-asset basis; the same bill carries a two-year loss carry-back for companies with annual turnover under $1 billion. On the day of the speech, the Senate referred the bill to its Economics Legislation Committee, with submissions closing 16 July 2026 and a report due 13 August 2026.

The permanent statutory threshold in paragraph 328-180(1)(b) of the Income Tax Assessment Act 1997 is “less than $1,000”, and the compilation in force at 27 June 2026 confirms it is unchanged. Under simplified depreciation, three settings shift together from 1 July 2026 on current law:

• Assets costing $1,000 or more are allocated to the general small business pool and deducted at 15% of the taxable-purpose value in the year first used or installed ready for use, then 30% of the opening pool balance in later years (section 328-190).
• The low-pool-value write-off shrinks — the rule letting a pool balance below the threshold be written off in full was boosted to $20,000 only for income years ending on or before 30 June 2026.
• The five-year lock-out rule revives — the rule preventing an entity that opts out of simplified depreciation from re-entering for five years has been disregarded for “increased access years”, a suspension that also ends with the income year ending 30 June 2026.

There is history here. The 2025-26 $20,000 threshold itself only became law on 4 December 2025 — five months into the income year it governed — with Schedule 7 commencing the day after assent. The practical lesson is that a threshold announced in a Budget is not a threshold you can rely on until it is enacted.

That pattern tempts businesses to assume the 2026-27 measure will follow the same script — but an assumption is all it would be. A purchase decision made in July or August 2026 that only stacks up with a $20,000 write-off is a decision resting on unenacted law. If the timing of a significant asset purchase is flexible, the enacted position, your cash flow and the bill’s progress can be weighed together — that conversation sits naturally inside tax planning for business owners with a registered tax agent.