Instant Asset Write-Off for Builders

What it is

The instant asset write-off lets a small business deduct the full cost of an eligible depreciating asset in the year it is first used or installed ready for use, instead of depreciating it over years. For a residential builder that is the nail gun, the laser level, the site shed, the scaffold and the second-hand excavator bucket.

The threshold has moved almost every year for a decade. Most of what you will read online is out of date, including some of it written this month. Here is the position as at 14 July 2026.

The FY2026-27 position, stated plainly

The $20,000 limit expired on 30 June 2026.

The ATO describes that $20,000 as a temporary increase to the instant asset write-off limit "from $1,000 to $20,000 for the 2025-26 income year". It was legislated for assets first used or installed ready for use between 1 July 2025 and 30 June 2026. The ATO limits table, last updated 27 May 2026, shows $20,000 against the range 1 July 2023 to 30 June 2026 and shows nothing at all after that date.

On 25 June 2026 the Treasurer introduced the Treasury Laws Amendment (Tax Reform No. 2) Bill 2026. Schedule 2 amends the Income Tax Assessment Act 1997 and the Income Tax (Transitional Provisions) Act 1997 to permanently extend the $20,000 write-off from 1 July 2026.

That Bill has been read a second time. It has not passed. Announced is not enacted.

So for an asset you first use today, the legislated limit is $1,000, with $20,000 backdated to 1 July 2026 if the Bill passes as drafted. Plan for the $20,000 arriving. Do not tell a client, an accountant or a lender that it is already law. Check the ATO page for the current position before you lodge or commit.

The eligibility test, and the 30 June trap

Three conditions, all of them:

• Aggregated turnover under $10 million. Aggregated means you plus your affiliates and connected entities. A builder with a plant hire trust and a labour entity adds them together.
• The asset costs less than the limit. Per asset, not per year. Ten tools at $3,000 each are ten write-offs.
• The asset is first used or installed ready for use in the income year.

That third one catches builders every June. Ordering is not enough. Paying is not enough. Delivery is not enough. It has to be installed ready for use. A scaffold system that lands in the yard on 28 June and is still strapped to the truck on 30 June is not written off this year. A tool bought on 15 June and on the job on 20 June is.

The test runs on the asset's entire cost, not your business-use share. A $40,000 ute used 40 per cent for business has a business portion of $16,000, but the write-off is unavailable because the asset cost $40,000. The $16,000 goes to the pool instead.

Above the threshold, and second-hand gear

An asset at or above the limit goes into the small business pool and depreciates at 15 per cent in the first income year, then 30 per cent each year after. You do not lose the deduction. You lose the timing.

New and second-hand assets both qualify. A used tipper at $18,000 is as eligible as a new one.

Cars and the car limit

Two separate ceilings, and builders confuse them constantly.

For 2026-27 the car limit is $69,883. That is the most you can use to work out depreciation on a passenger vehicle built to carry fewer than 9 passengers and a load under one tonne. Cost above the limit is not deductible under any depreciation rule at all. The GST credit is capped at one-eleventh of the car limit, which is $6,353 for 2026-27.

The car limit and the write-off limit are different tests applied in sequence. Because almost every car costs more than the write-off limit, cars in practice go to the pool, capped at the car limit.

A ute rated to carry one tonne or more is not a car, so the car limit does not touch it. Its cost still has to clear the write-off limit on its own.

The trap worth naming

Buying an asset to get the deduction is buying a dollar to get back the tax on it. At the 25 per cent base rate entity company rate, a $19,000 purchase you did not need costs $19,000 and returns $4,750. You are $14,250 down on a tool sitting in the shed.

The write-off is a timing benefit on something you were going to buy anyway. It is not a discount.