Good News for Small Businesses: The $20,000 Instant Asset Write-off Is Now Law

ATO & Compliance

The $20,000 instant asset write-off is now law for 2025–26 — and for farm businesses, that means machinery, equipment, and technology purchases could come straight off your taxable income this financial year.

If you run a cropping or livestock operation, there's welcome news heading into the 2025–26 financial year. The Federal Government has confirmed the $20,000 instant asset write-off is now law, giving eligible businesses a valuable opportunity to reduce their taxable income and reinvest in their operations. For farm businesses that regularly spend on tools, technology, and equipment, this is worth understanding properly — and acting on before 30 June 2026.

What Is the Instant Asset Write-Off?

Normally, when a business purchases an asset, the cost is deducted gradually over several years through depreciation. The instant asset write-off changes this by allowing you to claim the full cost of an eligible asset as an immediate deduction in the same year you purchase it — rather than waiting years to see the full benefit.

This can meaningfully reduce your taxable income for the 2025–26 financial year, freeing up cash that would otherwise be taxed.

💡 Good to know Both new and second-hand assets are eligible. And because the $20,000 threshold applies per asset, you can claim multiple assets throughout the year — as long as each one falls under the limit individually.

Who Is Eligible?

To qualify, your farm business needs to meet the following criteria:

• Your annual turnover is less than $10 million
• The asset costs less than $20,000 (the threshold applies per asset)
• The asset is first used or installed, ready for use, between 1 July 2025 and 30 June 2026
• The asset is used for business purposes (you can only claim the business-use portion)

What Kinds of Farm Assets Could Qualify?

A wide range of farm business assets may be eligible. If it's used in the operation of your business and costs under $20,000, it's worth discussing with your accountant. Some common examples for farming operations:

🔧 Tools & Equipment

Hand tools, power tools, workshop equipment, stock handling gear

💻 Technology

Laptops, tablets, GPS units, farm management software subscriptions (if capitalised)

🚗 Vehicles

ATVs, utes, or trailers — business-use portion only

💧 Irrigation & Infrastructure

Pumps, fittings, small water infrastructure under the threshold

🌾 Ag Attachments

Smaller implements, spray units, feeders, or attachments under $20,000

🏗️ Furniture & Office

Office furniture and equipment used for farm business administration

The key test is that the asset must be first used or installed, ready for use, within the 2025–26 financial year. You'll also need to keep thorough records — proof of purchase, the date the asset was first used, and documentation of its business use.

The Role of Your Bookkeeper vs Your Accountant

It's important to understand how the instant asset write-off flows through your business — and who does what.

📒 Your Bookkeeper

• Records all asset purchases accurately with correct dates, amounts, and account codes
• Codes purchases to a fixed asset account regardless of cost
• Follows any written instructions from your accountant on treatment of certain purchases
• Flags all relevant asset purchases at EOFY so your accountant can assess them

📊 Your Accountant

• Decides which assets qualify for the write-off
• Applies the deduction in your tax return
• Advises on timing of purchases to maximise the benefit
• Provides written instructions to your bookkeeper where needed

The best outcomes happen when your bookkeeping and accounting teams are working in sync. At AgBooks Australia, we make sure every asset purchase is recorded cleanly and your records are ready for your accountant to maximise your deductions at tax time.

Don't Leave It Until June

The write-off applies to assets first used or installed, ready for use, by 30 June 2026. That means any eligible purchase needs to be in use — not just ordered — before the end of the financial year.

If you've been sitting on a purchase decision, now is a good time to have the conversation with your accountant about whether it qualifies, and with your bookkeeper about how to record it correctly from day one.

Good records make the difference between a smooth deduction and a stressful EOFY scramble.

Want to Make Sure Your Assets Are Recorded Correctly?

At AgBooks Australia, we keep your farm business records accurate, compliant, and ready for your accountant to do their best work at tax time.

Talk to the AgBooks Team

Article sourced with reference to the Institute of Certified Bookkeepers.

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