Instant asset write-off cut shocks small businesses

Federal government cuts instant asset write-off scheme for 2025-26, reducing asset threshold from $20,000 to $1,000.

In Short

The federal government has cut the instant asset write-off scheme for the 2025-26 budget, with the $20,000 threshold set to revert to $1,000 if new legislation isn’t passed by June 30, 2026.

The decision raises concerns for small businesses and has sparked debate ahead of the upcoming federal election, despite government efforts to support them with other initiatives.

The federal government has reduced the instant asset write-off scheme for the 2025-26 budget year.

The current $20,000 asset threshold will not be extended, raising questions about the future of the policy.

If new legislation is not enacted by June 30, 2026, the threshold will revert to $1,000, affecting asset depreciation for purchases above that amount.

This budget decision poses challenges for small businesses planning capital upgrades in the latter half of 2025.

Write-off

Industry representatives had advocated for significant extensions to the write-off, which is likely to be a contentious topic leading up to the federal election on or before May 17.

The government is currently attempting to pass the legislation for the extension announced in last year’s budget, aimed at small businesses with annual turnovers under $10 million.

This legislation would allow businesses to instantly depreciate eligible assets valued at up to $20,000.

However, tension between the government and Opposition has delayed the law’s passage.

Small business advocates had hoped for a permanent extension to remove uncertainty around the tax break.

Despite this uncertainty, the government highlighted its previous support for small businesses through past asset write-off extensions.

In addition, new initiatives include a $150 energy rebate and the National Small Business Strategy to further support the SME sector.

Minister for Small Business Julie Collins reaffirmed the government’s commitment to bolster Australia’s small business sector.