A bill has been introduced into parliament to extend the $20,000 small-business instant asset write-off for the 2026 financial year, but chartered accountant GAIL FREEMAN urges caution.

Brock and Piper are keen to buy new equipment for their expanding business.

“For the last few years we haven’t known how much we could spend on new assets because the legislation wasn’t passed,” Brock said.

“Do you have any idea as to how much we can spend this year, Gail?”

I replied that there was some good news.

“A bill has been introduced into parliament to extend the $20,000 small-business instant asset write-off for the 2026 financial year,” I said.

“This proposal was included in the budget and it’s great to see it being introduced into parliament early in the financial year.

“Personally, I’d prefer that it not be legislated from year to year so that small businesses have certainty.”

I told Brock and Piper that it was hard to make business decisions when the information was not to hand.

“While I don’t like to pre-empt legislation that is still before the parliament, I think we can assume that small businesses with an aggregated turnover of less than $10 million will be able to deduct the cost of eligible assets less than $20,000, provided those assets are used or installed ready for use by June 30, 2026,” I said.

“The bad news is that if there are no further legislative changes, the threshold will revert to $1000 from July 1, 2026.”

Piper was keen to know when the legislation might be passed.

I told her the bill was introduced into parliament on September 4 and, at this stage, no further information is available.

“The next sitting of Parliament is on October 7, so we may have some more detail after that,” I said.

“As the threshold is set to reduce from July 1, 2026, at this stage, it would be prudent to come up with a plan for asset replacement this year to maximise the small-business opportunity.

“A good thing about this proposed $20,000 threshold is that the threshold applies to each asset and not to your total assets, provided that each asset is under this cap.

“So I suggest we have another meeting once the legislation is passed so we can review the situation and really utilise the productivity benefits that will flow to your business.”

However, I cautioned them that there was a downside of buying a lot of equipment.

“If you plan to keep it and not sell it, there is not too much of an issue. However, if it is an item that you may sell later, if you have fully depreciated the item, the total proceeds are assessable,” I said.

“I have seen some new clients who did not realise this, and while they had a huge tax deduction five years earlier, now they have a larger, unwelcome tax bill, which they were not anticipating. That’s why it’s important to plan for these major purchases.”

If you need guidance on purchasing new assets or any other tax matter, contact the experts at Gail Freeman & Co Pty Ltd on
02 6295 2844, email [email protected] or visit gailfreeman.com.au

Disclaimer
This column contains general advice, please do not rely on it. If you require specific advice on this topic please contact Gail Freeman or your professional adviser. Authorised Representative of Lifespan Financial Planning Pty Ltd AFS Lic No. 229892.

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