Small businesses across Australia are getting a much-needed boost with the extension of the $20,000 instant asset write-off. The Australian government has announced that the tax break will be available until June 2026, helping over four million businesses claim immediate relief to invest in new equipment and technology. But some are asking—why not make this a permanent change?
How the $20,000 Tax Break Benefits Small Businesses
The $20,000 instant asset write-off has been extended until June 30, 2026, and it’s expected to benefit around 4.1 million small businesses across Australia. Previously, businesses could only claim this deduction for purchases of up to $1,000. Now, with the new limit, businesses can deduct assets such as computers, kitchen equipment, tools, and more, as long as they cost under $20,000. This is a lifeline for many, especially as they face the mounting costs of doing business in tough times.
Assistant Minister for Productivity Andrew Leigh emphasized that this extension would help boost cash flow, providing immediate tax relief for small business owners and encouraging investment in technology and new equipment. He believes it’s a step in the right direction to help small businesses keep pace with the rapidly changing economic landscape.
But is It Enough?
While small businesses are grateful for the extension, some are pushing for more. Matthew Addison, chair of the Council of Small Business Organisations Australia (COSBOA), called for the instant asset write-off to be made permanent and for the threshold to be raised even further. Addison argued that the current $20,000 limit is too low to support meaningful upgrades, especially when it comes to machinery, digital systems, and other critical investments that help businesses run efficiently.
“Small businesses want to invest in machinery, digital systems, and equipment that improve how they operate. We therefore need a threshold that enables genuine productivity investment, not token purchases,” Addison said to Yahoo Finance. It’s a fair point. While the $20,000 threshold is certainly helpful, it may not go far enough for businesses that need to make larger, long-term investments to improve operations.
The Problem of Uncertainty
Another issue that has arisen is the ongoing uncertainty about the future of the write-off. This tax break has been extended year by year, leaving small business owners constantly wondering if the deduction will continue. Susan Franks, a tax and superannuation leader at Chartered Accountants Australia and New Zealand, noted that this annual uncertainty can create problems for business owners who need to plan for the future.
“It creates unnecessary uncertainty for small business owners,” Franks said. “They need stability to plan their investments and grow their businesses.”
What’s Next?
While the $20,000 instant asset write-off extension is definitely a win for small businesses, the question remains: will the government listen to industry groups and make the deduction permanent? There’s no doubt that a more stable and predictable tax policy would benefit small businesses in the long run, especially as they face challenges ranging from rising costs to changing technology.
For now, though, businesses can take comfort in the fact that they have a few more years to benefit from this tax break. It may not be the permanent solution some are hoping for, but for now, it’s better than nothing.
