EOFY 2026 Countdown: The $20,000 Instant Asset Write-Off Is Ending
If you are running a trade or construction business with annual turnover under $10 million, you have until 30 June 2026 to write off up to $20,000 per asset against your taxable income. Parliament legislated this extension in November 2025 under the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Act 2025. It is law, not a budget promise. After 30 June, the threshold drops back to $1,000. With roughly 446,000 small construction businesses in Australia (ABS/CEDA, June 2024), this deadline affects almost every tradie operating today.
What Is the Instant Asset Write-Off, and Why Does It Matter for Tradies?
The instant asset write-off (IAWO) lets eligible small businesses deduct the full cost of a qualifying asset in the year it is first used or installed ready for use, rather than depreciating it over several years. Under the simplified depreciation rules in Division 328 of the ITAA 1997, a sole-trader plumber buying a $12,000 pipe inspection camera this financial year can reduce their taxable income by the full $12,000. Immediately.
The threshold has been temporarily elevated to $20,000 since 2016 (Hayes Knight, 2025), with the legislated baseline sitting at just $1,000. For any tradie with tools, equipment, or software purchases planned in the next few months, the timing of those acquisitions now carries a real tax consequence. In our experience, this is exactly the kind of deadline that gets missed when June gets busy.
The Hard Deadline: 30 June 2026
The asset must be first used or installed ready for use on or before 30 June 2026. The date of purchase or the date on the invoice is not the test. The ATO looks at when the asset was available for business use.
The Delivery Timing Trap
This is the single most common mistake advisers see at EOFY.
If you order a $15,000 compressor on 25 June and it arrives at your depot on 3 July, you cannot claim it in your 2025-26 return. The installation or readiness date falls in the new financial year, and that is what the ATO cares about.
Practical rule: if the asset needs to be delivered, allow at least two to three weeks of lead time before 30 June. For bulky items requiring installation (a hoist, a permanent spray booth, a split-system for your office), you need to build in the installation time as well. Get the supplier to confirm the delivery date in writing before you commit.
Who Is Eligible?
You qualify if your aggregated annual turnover is under $10 million (s.328-110 ITAA 1997). This covers the vast majority of Australian construction and trades businesses. ABS data shows 97.3% of the 2.7 million actively trading businesses in Australia as of June 2025 were small businesses. The threshold is assessed on aggregated turnover, which includes connected and affiliated entities, so group structures should confirm this with their accountant.
Both new and second-hand assets qualify. A used ute, a refurbished concrete mixer, and second-hand scaffolding are all eligible provided they meet the cost threshold and readiness date.
The lock-out rule that normally prevents businesses from re-entering simplified depreciation after opting out is suspended until 30 June 2026 (Moore Australia). If your business opted out in a prior year, you can re-enter this year.
What Can Tradies Actually Write Off?
The ATO's own guidance on tradie deductions lists specific qualifying tools and equipment (ATO, "Tradies — be certain about what you can claim"):
- Power tools: drills, sanders, circular saws, angle grinders, nail guns
- Hand tools: toolboxes, levels, clamps
- Larger equipment: ladders, concrete mixers, pressure washers
- Vehicles: utes and vans used for work (note: the car limit applies to passenger vehicles; check with your accountant if the vehicle is dual-cab and used partly for private purposes)
- Computers and tablets used for business
- Trade-specific equipment: tile saws, plumbing cameras, welding sets, generators
Cost includes transport and installation. If you pay $17,500 for a welder and $400 in freight, the claimable cost is $17,900, which is still under the $20,000 cap.
The write-off threshold applies per asset, not per business. A builder who buys a $19,000 laser level, a $16,000 scaffolding set, and an $8,000 compressor can write off all three, for a total deduction of $43,000 in one year (Moore Australia). There is no aggregate cap across multiple assets.
What Is Excluded?
The following are excluded from simplified depreciation (ATO, "Assets and exclusions"):
- Capital works (structural improvements under Div 43)
- Horticultural plants
- Assets in a software development pool
- Assets leased to another party under a depreciating asset lease
- R&D assets
Does Software Qualify? (Yes, Including Trade Management Platforms)
This is one of the most overlooked angles. Software that is not in a software development pool qualifies as a depreciating asset under Div 40 (ATO). That includes off-the-shelf and subscription-based software: trade management platforms, quoting tools, and compliance software all count.
If you purchase an annual subscription or a multi-year licence for a job management platform such as SkillsDock, the cost qualifies under the IAWO provided it is first used or accessible before 30 June 2026. The same applies to tablets or phones purchased primarily for running time-tracking or field-management software on site.
Always check with your registered tax agent on how your specific software is structured. The characterisation (perpetual licence vs. service subscription) can affect deductibility.
How Much Tax Will You Actually Save?
The IAWO is not a cash refund. It reduces your taxable income, and the dollar saving depends on your tax rate (Hayes Knight, November 2025).
| Entity type | Marginal/effective tax rate | Tax saving on $20,000 write-off |
|---|---|---|
| Sole trader (taxable income $45,001–$135,000) | 32.5% | ~$6,500 |
| Base rate company (turnover < $50M, rate 25%) | 25% | $5,000 |
| Other company (standard 30% rate) | 30% | $6,000 |
On a $60,000 spend across three qualifying assets each under $20,000, a sole trader on 32.5% saves roughly $19,500 in tax (Moore Australia). That is real money heading into the new financial year.
One more thing to watch: if you are GST-registered, you calculate the asset cost excluding GST. A $22,000 (GST-inclusive) purchase has an ex-GST cost of $20,000, exactly at the threshold, with the GST component recovered separately via your BAS.
What Happens to Assets Over $20,000?
Assets costing more than $20,000 cannot be immediately written off. They go into the general small business pool under simplified depreciation rules: 15% deduction in the first year, then 30% per year on the diminishing value (ATO). This is still faster than standard effective life depreciation for many asset classes, but you will not recover the full cost in year one.
There is one useful backstop: if the pool balance falls below $20,000 at the end of the income year, you can write off the entire remaining balance immediately.
One Tax Trap to Know: Selling a Previously Written-Off Asset
If you claim the full $20,000 write-off on an asset, its tax cost base is reduced to zero. When you later sell that asset (a written-off ute, a trailer, a tool set), the full sale price becomes assessable income in the year of sale (Future Accounting, Melissa Cunliffe).
A tradie who writes off a $15,000 trailer this year and sells it for $8,000 in two years will pay income tax on the full $8,000. Factor this into your planning, particularly for items you expect to resell within a few years.
Is This the Last Extension?
Possibly. The $20,000 threshold has been extended repeatedly since 2016 via temporary legislative amendments. COSBOA (the Council of Small Business Organisations Australia) has advocated for a permanent threshold of $150,000 with indexation. Chartered Accountants ANZ has noted that the year-by-year uncertainty undermines business confidence and capital planning (Moore Australia).
Worth being blunt about: without further legislation, the threshold reverts to $1,000 on 1 July 2026. At that level, almost no meaningful business equipment qualifies for immediate write-off. Treat this financial year as the last opportunity under this regime unless the government acts again.
EOFY 2026 Action Checklist for Tradies and Small Builders
Work through this before 30 June:
- List every asset you plan to purchase in the next three months, covering tools, vehicles, equipment, and software.
- Confirm delivery or installation dates with your supplier in writing. If the asset will not be ready for use by 30 June, the write-off moves to 2026-27 and may not qualify at all.
- Check your aggregated turnover is under $10 million. Group structures and related entities count.
- Check whether you opted out of simplified depreciation in a prior year. If so, confirm you can re-enter (lock-out rule suspended until 30 June 2026).
- Separate your GST cost if you are registered. The $20,000 cap applies to the ex-GST amount.
- Note assets you plan to sell within the next few years and decide whether immediate write-off is the right call.
- Speak to your registered tax agent before making large purchases. Your agent can calculate the actual cash benefit based on your specific situation.
Frequently Asked Questions
Can I claim the $20,000 write-off on more than one asset?
Yes. The threshold is per asset, not per business. You can write off multiple assets in the same income year provided each individual asset costs $20,000 or less (ex-GST if you are registered) and each is first used or installed ready for use by 30 June 2026.
Does a second-hand ute qualify?
Yes. Both new and second-hand assets qualify under the IAWO for 2025-26. However, passenger vehicles are subject to the car limit (indexed annually by the ATO), which may cap the deductible amount below the full purchase price. A pure work vehicle such as a tray-back ute used exclusively for business is generally not subject to the car limit. Confirm with your tax agent based on the specific vehicle type and use.
What if I ordered the asset before 30 June but it arrives in July?
The asset does not qualify for a 2025-26 deduction. The ATO test is the date the asset is first used or installed ready for use, not the order date or invoice date. If delivery falls after 30 June, the write-off shifts to the 2026-27 year, where the threshold is expected to revert to $1,000.
Does software subscription qualify?
Software that is not held in a software development pool qualifies as a depreciating asset under Div 40 ITAA 1997. Off-the-shelf licences and cloud-based business software are generally eligible. Software created or commissioned for your own business and placed in a development pool is excluded. Your tax agent can confirm how a specific subscription is treated.
I previously opted out of simplified depreciation. Can I still use the IAWO this year?
Yes. The five-year lock-out rule, which normally prevents a business from re-entering simplified depreciation after opting out, is suspended until 30 June 2026. You can re-enter for the 2025-26 income year. Your tax agent will need to record the re-entry correctly in your return.
Conclusion
30 June 2026 is a hard stop. The $20,000 instant asset write-off is legislated for this financial year, and every indication from industry bodies and tax advisers is that a further extension is not guaranteed. For Australian tradies and small builders, that means roughly three months to identify qualifying assets, confirm delivery timelines, and make purchasing decisions that could reduce this year's tax bill by thousands of dollars.
Talk to your registered tax agent now, not at the end of June. The paperwork, delivery scheduling, and cashflow planning take time. The write-off does not.