The $20,000 Instant Asset Write-Off Ends 30 June 2026 — What Business Sellers Need to Do Now

If you're planning to sell your business in the next 12–24 months and you've been putting off equipment purchases, repairs, or upgrades — the window to do it cheaply is closing.

The $20,000 instant asset write-off threshold, which allows small businesses to immediately expense eligible assets rather than depreciate them over years, ends on 30 June 2026. From 1 July 2026, the threshold drops to just $1,000.

For a seller doing a pre-sale refresh — new equipment, updated IT, workshop tools, commercial fitout items — this is the difference between a full immediate tax deduction and writing off assets over several years at a fraction of their cost.

Who qualifies

The $20,000 instant asset write-off applies to small businesses with an aggregated annual turnover under $10 million. The asset can be new or second-hand.

There's also a general asset pool provision: if the closing balance of your general small business asset pool (before depreciation) is $20,000 or less on 30 June 2026, you can claim a full deduction for the entire pool in the 2025-26 year.

This is particularly useful for businesses with older equipment sitting in the pool that hasn't been fully depreciated yet.

Why this matters if you're selling

Pre-sale asset refreshes serve two purposes: they reduce your tax bill now, and they can marginally improve how buyers perceive the business.

Buyers doing due diligence look at the condition and age of plant, equipment, and infrastructure. A business with noticeably dated or poorly maintained assets will attract lower offers or requests for price adjustments. A business where the owner has clearly maintained and upgraded will present better — even if buyers understand the underlying multiples are what they are.

The tax deduction makes the refresh cheaper in after-tax terms. A $15,000 equipment purchase for a business owner on a 30% tax rate costs an effective $10,500 after the deduction. After July, that same purchase would need to be depreciated over several years — the upfront cash benefit disappears.

What's worth buying (and what isn't)

Not all pre-sale spending is created equal. Buyers pay a multiple on sustainable earnings — so the question isn't "what can I expense before June 30?" but "what genuinely improves the business's earnings quality or reduces future buyer risk?"

Worth doing

• Equipment that reduces labour costs or increases throughput — directly improves EBITDA, which is what buyers are buying
• Technology or software that reduces owner dependency — buyers discount heavily for businesses where the owner is the system; anything that automates or systematises is valuable
• Safety or compliance items — buyers conducting due diligence will flag non-compliance; fixing it pre-sale is cheaper than a price adjustment post-discovery
• Workshop/factory equipment in poor condition — dilapidated plant signals deferred maintenance to buyers; replace before they see it

Think twice

• Cosmetic fitout — new paint or furniture rarely moves the multiple; buyers are buying earnings, not aesthetics
• Assets that won't be used by the new owner — if the buyer is changing the business model, your equipment purchase adds no value
• Large one-off purchases that inflate costs — unusually high costs in your last full year of trading will attract buyer scrutiny; you'll need to add them back as a normalisation, which creates complexity

The tax mechanics in plain English

Under the current rules for 2025-26:

• Any eligible asset under $20,000 can be fully deducted in the year it's first used or installed
• No depreciation schedule, no pooling — it's just gone from taxable income in year one
• Multiple assets can qualify — you're not limited to one; each asset under $20,000 gets its own immediate deduction
• Assets of $20,000 or more go into the general small business asset pool and are depreciated at 15% in year one, 30% in subsequent years

From 1 July 2026, the $20,000 threshold reverts to $1,000. Anything over $1,000 goes into the pool. You lose the immediate deduction benefit on anything between $1,000 and $20,000.

For businesses with multiple assets to purchase — say, five pieces of equipment at $8,000 each — the difference is a $40,000 immediate deduction this year versus a first-year pool deduction of $6,000 next year. The timing matters.

How this interacts with a business sale

If you buy assets this financial year and sell the business before 30 June 2027, the new owner inherits those assets at their written-down value (zero for immediately expensed assets). This is worth discussing with your accountant, particularly if the sale includes an asset sale structure rather than a share sale — the two structures treat assets differently.

In an asset sale, the seller typically retains or transfers specific assets at agreed values. An asset you've already fully written off has a zero book value — but the buyer may still attribute value to it. Your accountant and solicitor should model this in the sale agreement.

In a share sale, the company retains the assets and their tax treatment passes to the new owner. The write-off you took last year doesn't create a problem — it's already reflected in the company's accounts.

The other deadline: Budget night, May 12

The federal budget is scheduled for May 12, 2026. In addition to the instant asset write-off ending June 30, the budget is expected to resolve the review of the 50% CGT discount — which would affect the after-tax proceeds of your business sale directly.

These two deadlines — the write-off ending June 30 and the CGT landscape clarifying May 12 — make the next 90 days unusually important for business owners who are approaching a sale.

For more on the CGT discount review, see: Australia's 50% CGT Discount Is Under Review.

What to do now

1. List every asset purchase you've been deferring — workshop equipment, IT, vehicles, tools, systems
2. Confirm each is under $20,000 — if over, it goes to pool regardless of timing
3. Check whether it's genuinely earnings-accretive — ask your accountant to model the EBITDA impact, not just the tax saving
4. Order with enough lead time to install by June 30 — supply chain delays are real; "ordered" isn't "installed"
5. Get your valuation done — so you know whether pre-sale spend makes sense given your current multiple and likely sale price

The tax saving is real but it's not the primary reason to spend. The primary reason is whether the asset makes your business more sellable, more profitable, or both. The write-off just makes it cheaper to find out.