How does the instant asset write-off work for tradies?

Every tradie hears about the instant asset write-off around the end of the financial year, usually from a mate who bought a ute in June. It is a real concession, and it has been a moving target for years. This page sets out the current position as the ATO describes it, then shows how it fits with buying kit on finance. It is general information, not tax advice, so your accountant has the final word on your numbers.

Is the instant asset write-off still on in 2026?

Yes. The ATO states that from 1 July 2026 the $20,000 instant asset write-off is permanent, following the announcement in the 2026-27 Budget. Before that date, the same $20,000 limit applied through the 2025-26 income year. The practical change is that there is no longer a looming 30 June cliff each year that forces rushed buying.

The ATO’s key points:

• The business must have aggregated annual turnover of less than $10 million.
• The limit is $20,000 and applies to each asset, so several eligible assets can each qualify.
• The deduction is for the business portion of the cost.
• The asset must be first used, or installed ready for use, in the income year you claim it.
• Upgrades to existing assets can qualify if the upgrade cost is under the limit.

We have not repeated rules we could not verify from the ATO. If an item looks borderline, ask your accountant.

What does “per asset” mean for a tradie?

This is where tradies sometimes trip up. The $20,000 is not a shared budget for the year. Each eligible asset is tested on its own.

Purchase	Cost	Under the limit?
Single cordless tool set	Under $20,000	Yes, tested on its own
Trailer	Under $20,000	Yes, if business use applies
Excavator	Over $20,000	No, it is depreciated instead
Five separate tools, each under $20,000	Each under $20,000	Each tested separately

A bundle on one invoice can be a grey area, since what matters is what each asset costs. Itemised invoices make it easy for your accountant to see each item.

Which tradie assets usually qualify?

The ATO says most new and second-hand depreciating assets can qualify, subject to exclusions. For a trade business, that often includes:

1. Power tools and hand tool sets.
2. Test and diagnostic equipment.
3. Trailers and smaller plant.
4. Compressors, generators and welders.
5. Office equipment and software hardware used in the business.
6. Lawn and garden machinery.

Pages like power tool finance and trailer finance cover buying those items. Larger purchases, such as an excavator or a tipper truck, typically cost more than the limit and are depreciated.

What happens to assets over $20,000?

Small businesses that use simplified depreciation can pool assets of $20,000 or more. The ATO says the pool is depreciated at 15% in the first income year and 30% in later years, and that a pool balance under $20,000 at year end can be written off. The ATO has also suspended the five-year lock-out for businesses that left simplified depreciation, until 30 June 2027, so businesses that opted out earlier can re-enter. Your accountant can say whether that suits you.

Can you claim it if you buy on finance?

The claim generally depends on when the asset is first used or installed ready for use, not on whether you paid in full. Many tradies spread the payments through a loan or lease and still use the deduction. How a lease is treated, though, can differ from a loan, which is a question for your accountant before you sign. The buy versus lease versus loan guide compares the options side by side.

A deduction reduces taxable income. It does not return the purchase price. A $15,000 tool package deducted in full lowers what you pay in tax by a share of that figure, depending on your rate, but the cash has still left your account. Plan the cash side first, then enjoy the tax side.

Putting numbers on a claim

Consider a hypothetical with rounded amounts, offered only to show the mechanics.

A concreter with turnover well under $10 million buys a concrete saw, a vibrating screed and a laser level in the same month, costing $4,500, $3,200 and $1,300. Each is under $20,000, so each is tested on its own and may qualify for an immediate deduction for the business portion. The concreter funds them on a short loan instead of draining the account just before a large pour. The repayments come from the extra pours the kit makes possible. At tax time the accountant needs the invoices and the date each item went into service.

Planning a purchase and want to see how it might be funded? Tell us what you are buying in about a minute.

Should tax drive the purchase decision?

No. A deduction on something you do not need is still money spent on something you do not need. Ask the practical question first: does it earn more than it costs? Our equipment payback calculator tests that. If the answer is yes, the tax treatment is a bonus that improves the result.

Timing matters mostly for cash. Buying just before a quiet season can leave repayments heavy, while buying at the start of a busy one can have the kit earning from day one. See the business loans page on instant asset write-off finance for the loan side of a year-end purchase.

How do you see if you qualify?

Planning does not have to wait for tax time. A minute with our form is all the first step needs, and there is no credit check. We keep your enquiry in-house instead of shopping it around, and an actual person rings you to discuss it. Tell us accurately about turnover, the item you plan to buy and any tax debt, and the first suggestion should be the right one.

See your equipment finance options