A $20,000 write-off is not $20,000 cash back

A government bill proposes to make the $20,000 instant asset write-off permanent from 1 July 2026. The Senate Economics Legislation Committee report date is 13 August 2026. At publication time, Parliament's bill record still listed the bill before the House of Representatives. A committee report does not by itself make the proposal law.

Under the proposal, eligible small businesses with aggregated turnover below $10 million could immediately deduct the business-use portion of each eligible asset costing less than $20,000. Eligibility still depends on the final law, asset cost, business use and when the asset is first used or installed ready for use.

A deduction is not reimbursement of the invoice

A tax deduction reduces taxable income; it does not return the asset's purchase price in cash. The tax effect depends on the applicable tax rate, business-use proportion, taxable income, entity type and timing.

The business still needs to fund the purchase price or meet the deposit, loan principal, interest, fees and any balloon payment. The tax outcome and the finance repayment schedule occur on different timelines.

Worked example: $18,000 equipment purchase

Assume an $18,000 eligible asset, 100% business use, an assumed 25% tax rate and sufficient taxable income. The illustrative potential tax effect is $18,000 × 25% = $4,500.

The business still funds the $18,000 purchase. After the illustrative tax effect, the economic cash cost is about $13,500 before interest, finance fees and timing differences. This is a mathematical illustration, not a tax calculation, loan quote or statement that a particular business uses a 25% rate.

Asset purchase check

Law and asset — confirm the rule has commenced for the relevant income year, then check cost, business use and ready-for-use date.

Tax effect — calculate the eligible deduction using the applicable tax treatment; do not treat the purchase price as cash back.

Finance cash flow — test the deposit, repayments, interest, fees and any balloon against the business's cash-flow forecast.

Bottom line

Buy equipment because it supports the business case, not because of a deduction headline. Confirm the final law and tax treatment with a registered tax adviser, then compare purchase, lease and finance options using the business's actual cash flow.

Sources

Parliament of Australia — Treasury Laws Amendment (Tax Reform No. 2) Bill 2026

Parliament of Australia — Senate committee inquiry

Treasury Ministers — Second reading speech

Australian Taxation Office — Instant asset write-off

business.gov.au — Leasing or buying vehicles and equipment

General information only. This is not financial advice. Loan options and eligibility depend on your personal income, liabilities, assets and lender assessment criteria.