Quick answer
The ATO's instant asset write-off lets small businesses with aggregated turnover under $10 million immediately deduct the business portion of an asset costing less than $20,000, for assets first used or installed ready for use on or after 1 July 2023. The test is per asset. Most new work vehicles cost more than that, so they're depreciated instead, but some trailers, older vehicles and fit-outs can qualify.
Key points
- Threshold: less than $20,000 per asset, for businesses with aggregated turnover under $10 million.
- Applies to assets first used or installed ready for use on or after 1 July 2023.
- Applies per asset — several assets can each qualify if each is under the threshold.
- Most new work vehicles cost more; they're depreciated rather than written off.
- Threshold
- Less than $20,000 per asset
- Turnover test
- Aggregated turnover under $10 million
- Timing
- First used or installed ready for use
- Cars
- Car limit still applies
What is the instant asset write-off?
It’s part of the ATO’s simplified depreciation rules for small business. Instead of depreciating an eligible asset over several years, an eligible business can deduct the business-use portion of its cost in the year it’s first used or installed ready for use.
The ATO’s current table, checked in October 2026, shows:
| When the asset is first used or installed ready for use | Threshold (aggregated turnover under $10 million) |
|---|---|
| On or after 1 July 2023 | Less than $20,000 |
The ATO references the threshold in its examples for the 2025–26 income year. Thresholds have changed many times over the years, and governments announce changes in Budgets, so check the ATO page in the year you buy.
The per-asset test
The threshold applies to each asset, not to your total spending. The ATO says you can use the write-off for multiple assets if the cost of each individual asset is less than the threshold. So two trailers each costing under the threshold could both qualify, while a single ute costing more than the threshold wouldn’t.
Does it apply to work vehicles?
Honestly, for most new work vehicles, no — simply because of price. New utes, vans and trucks usually cost well above the threshold. They’re depreciated under the general or simplified depreciation rules instead, and your accountant handles that.
Where the write-off often does come into play:
- trailers — box, tandem and some smaller plant trailers;
- older second-hand vehicles priced under the threshold;
- separately purchased fit-outs and equipment, where they’re genuinely separate assets;
- tools and gear that go in the vehicle.
Cars and the car limit
Passenger cars have their own rule: the car limit caps the cost you can use to work out the car’s decline in value. For 2025–26 it was $69,674, and for 2026–27 it’s $69,883. The ATO is clear that the excess over the car limit can’t be claimed under any depreciation rules. The car limit doesn’t apply to vehicles that aren’t passenger vehicles, or to vehicles modified for use by people with a disability. See car limit.
Timing: “first used or installed ready for use”
This is where EOFY buying goes wrong. The test isn’t when you sign the contract or pay the deposit; it’s when the asset is first used or installed ready for use. A ute ordered in June but delivered in July falls into the later income year. If you’re buying to bring a deduction into this year, make sure the vehicle is delivered and in use before 30 June. Our guide to buying a work vehicle before 30 June covers this in detail.
Business use and the write-off
The deduction applies to the business-use portion of the asset. If a trailer is used 70% for business and 30% privately, only the business share is deductible. Keep records that support your business-use figure.
Financing and the write-off
How you pay for an asset — cash, chattel mortgage or hire purchase — doesn’t generally decide whether the write-off is available; the cost, timing and your eligibility do. Leased assets are different, because under a lease the financier owns the asset. If the write-off matters to your decision, talk to your accountant before choosing a structure.
A tax deduction isn’t free money
It’s worth saying plainly: a deduction reduces taxable income; it doesn’t refund the purchase price. Buying something you don’t need to get a deduction usually leaves you worse off. Buy what the business needs, and let the write-off be a bonus where it applies.
Illustrative example: a gardener’s trailer and mower
Illustrative only. A gardening sole trader with turnover well under $10 million buys a tandem trailer and a commercial mower in May, each costing less than the threshold, and both are in use before the end of June. Her accountant claims both under the instant asset write-off for the business-use share. Her ute, which cost more than the threshold, continues to be depreciated as normal.
Questions to ask your accountant
- Is my business’s aggregated turnover under $10 million, including connected entities?
- Am I using the simplified depreciation rules?
- Which of my planned purchases are separate assets for the per-asset test?
- When will each asset be first used or installed ready for use?
Write-off versus depreciation for a vehicle
For a vehicle that costs more than the threshold, the business still gets a deduction — it’s just spread over time through depreciation rather than taken all at once. For many businesses, that’s fine. What matters most is buying the vehicle that suits the work at a price the business can comfortably repay. Tax timing should be a secondary factor, not the reason to buy.
If you’re weighing up a cheaper vehicle under the threshold against a better-suited one above it, consider reliability, downtime and resale over the full time you’ll own it, not just the year-one deduction.
Buying vehicles or gear before year end?
If you’re planning a vehicle purchase around tax time, get the finance lined up early so delivery isn’t delayed. Tell us what you’re buying — the enquiry takes about a minute. Trailers are covered on our trailer finance page.
There’s no credit check just to ask. One specialist looks after your enquiry rather than sending it around a list of lenders, and that person calls you to talk through timing and structure. Give us accurate details about the vehicle, price and delivery date so we can work to your deadline. Start now.
Frequently asked questions
Can I write off a ute under the instant asset write-off?
Only if your business is eligible and the ute costs less than the $20,000 threshold. Most new utes cost more, so they're depreciated over time instead. Some older second-hand utes may come in under the threshold.
Does financing the vehicle stop me claiming the write-off?
Generally no. How you pay for the asset doesn't usually decide eligibility; the cost, your turnover and the timing do. Your accountant will confirm based on your structure.
When does the vehicle have to be used?
The ATO's test is when the asset is first used or installed ready for use. Buying a vehicle on 29 June that isn't delivered until July doesn't meet the earlier year's timing.
Can I write off several assets?
Yes. The ATO says you can use the write-off for multiple assets, as long as the cost of each individual asset is less than the threshold.