Instant Asset Write-Off Calculator AU 2025-26 ($20k)

What this calculator works out

The instant asset write-off (IAWO) is a small business tax concession that lets eligible businesses with aggregated turnover under $10 million immediately deduct the cost of each depreciating asset costing less than $20,000 in the year the asset is first used or installed ready for use, instead of depreciating it over years.

For 2025-26 the threshold is $20,000 per asset, applies between 1 July 2025 and 30 June 2026, and is currently legislated to revert to $1,000 from 1 July 2026 unless extended in the federal budget.

This calculator runs the eligibility tests, applies GST treatment correctly (registered businesses use GST-exclusive cost; unregistered use GST-inclusive), apportions for business use percentage, and falls back to the small business simplified depreciation pool for assets that miss the threshold.

The formula and where the rates come from

// Eligibility (ATO):
aggregatedTurnover  < $10,000,000
firstUseDate        between 2025-07-01 and 2026-06-30
asset               is a depreciating asset under simpler depreciation

// Per-asset cost test:
costForThreshold = isGSTRegistered ? cost / 1.10 : cost
if costForThreshold < $20,000:
   year1Deduction = costForThreshold × businessUse%
   treatment = "instant write-off"
else:
   year1Deduction = costForThreshold × businessUse% × 15%   // s 328-185
   pool += costForThreshold × businessUse% × 85%            // remainder to pool
   treatment = "small business pool"

// Subsequent years:
year2Deduction = openingPool × 30%   // diminishing-value, s 328-190
if openingPool < $20,000:
   write off the entire pool balance under s 328-210

Sources: ATO instant asset write-off page, the ATO small business newsroom, business.gov.au IAWO guidance, and Subdivision 328-D of the Income Tax Assessment Act 1997.

How to read the inputs

• Aggregated turnover — your business's total ordinary income from carrying on a business, plus the income of any connected entities or affiliates. Must be under $10 million for IAWO eligibility.
• Registered for GST — affects which cost figure is tested against the $20,000 threshold:
  • Registered → GST-exclusive cost (you claim GST back as an input tax credit, so it is not a real cost);
  • Not registered → GST-inclusive cost (the GST is a real cost and forms part of your deduction).
• Asset cost — what you paid (GST-inclusive). The calculator strips GST automatically if you are registered.
• Business use % — the proportion of the asset used for income-producing business purposes. Use a logbook or other records to support the percentage.
• First-use / install-ready date — when the asset was first used or first installed ready for use in the business. Must be between 1 July 2025 and 30 June 2026 to qualify for the $20,000 threshold.

Worked examples

1. $4,400 laptop (GST-incl), 100% business use. GST-excl = $4,000 < $20,000 → $4,000 year-1 deduction.

2. $16,500 used ute (GST-incl), 70% business use. GST-excl = $15,000 < $20,000 → $10,500 year-1 deduction ($15,000 × 70%).

3. $33,000 industrial machine (GST-incl), 100% business use. GST-excl = $30,000 ≥ $20,000 → small business pool. Year-1 deduction = $30,000 × 15% = $4,500. Closing pool balance = $25,500. Year-2 deduction = $25,500 × 30% = $7,650.

4. Three assets in same year. $4k laptop + $8k trailer + $30k machine. Two instant write-offs ($4k + $8k) plus 15% pool deduction on $30k ($4,500) = $16,500 total year-1 deduction. The threshold is per asset, so the multiple under-$20k items are each fully deductible.

5. Sole trader not registered for GST. $4,400 tools, 100% business use, not GST-registered. Use GST-inclusive cost: $4,400 < $20,000 → $4,400 year-1 deduction (the $400 GST is part of the cost because there is no input tax credit).

6. Pool balance falls below $20,000 in year 2. $24,200 asset → $22,000 GST-excl in pool. Year-1 deduction $3,300, closing balance $18,700. Entire $18,700 written off in year 2 under s 328-210 because the closing balance is below the threshold.

7. Asset bought in May 2026, installed in August 2026. First-use date is 1 July 2026 or later → outside the IAWO $20,000 window. The asset falls into the post-1-July-2026 regime where the threshold drops to $1,000 (under current law). Plan to install before 30 June 2026 to lock in the $20,000.

8. $11M turnover. Above the $10M small business limit → not eligible for the simpler depreciation rules. Use the general depreciation rules (effective life from the ATO commissioner's table) instead.

Common pitfalls

• The threshold is per asset, not aggregate. Many businesses think the $20,000 is a yearly cap — it is not. Each asset under $20,000 qualifies separately.
• It is "first used or installed ready for use", not "purchase date". A machine ordered in March 2026 that arrives in August 2026 is outside the FY 2025-26 window.
• GST treatment is decisive at the threshold. A $21,500 GST-inclusive asset is $19,545 GST-exclusive, which is under $20,000 and qualifies — common confusion.
• Business use percentage must be evidenced. Use a logbook (vehicles), diary records (mixed-use equipment) or other support. The ATO can audit.
• Buildings and most software are excluded. They have separate capital allowance rules and do not get the IAWO.
• Assets leased out cannot use the IAWO. Eligibility requires the asset is used in carrying on the business.
• The threshold drops to $1,000 from 1 July 2026 under current law. Recent budgets have extended the higher threshold for one year at a time. Until announced, plan major equipment purchases for before 30 June 2026.
• Cars are subject to a separate depreciation cost limit ($69,674 in 2025-26) which caps the deductible cost for first-element cost-base purposes. The cost limit interacts with the IAWO threshold and business use percentage.
• The $20,000 rule applies to each business owner separately. A partnership of two each has access to the rule for partnership-owned assets, but the asset is owned by the partnership, not the partners.

Related calculators

• Property Depreciation Calculator (AU) — Division 40/43 for investment-property assets.
• Work-from-Home Tax Deduction Calculator (AU) — for sole-trader home offices.
• 50% CGT Discount Calculator (AU) — for when you sell business assets.
• Novated Lease EV Calculator (AU) — alternative to outright purchase for vehicles.
• FBT Novated Lease Calculator (AU) — for non-EV business vehicles via novated lease.

Sources:

• ATO — Instant asset write-off
• ATO — Small business newsroom (current $20k threshold)
• business.gov.au — Instant asset write-off
• Income Tax Assessment Act 1997 — Subdivision 328-D (simpler depreciation)
• ATO — Effective life of depreciating assets (commissioner's table)