Instant Asset Write-Off Explained for Hospitality (2025–26)

With the end of the financial year fast approaching, many hospitality businesses are gearing up to file their tax returns.

This year, eligible business owners may take advantage of the ATO’s $20,000 instant asset write-off, which the federal government has announced as part of the 2026 federal budget that it will make this a permanent feature of the tax system. If you’ve been thinking about upgrading your kitchen equipment, technology, or furniture, it’s worth considering this now. 

Here’s a general overview of how the scheme works, key eligibility criteria and how to apply.

• What is an instant asset write-off?
• What are the current rules for 2025–26?
• What are the key dates for asset cost thresholds?
• What does this mean for hospitality venues?
• How does an instant asset write-off work?
• How to apply for an instant asset write-off
• Make the most of it before 30 June

What is an instant asset write-off?

An instant asset write-off allows eligible businesses to claim an immediate tax deduction for certain assets purchased and used for business purposes, in the same year they’re bought, rather than depreciating the cost over several years. It is a deduction that may reduce taxable income; it is not a cash rebate or refund.

The write-off applies on a per-asset basis, meaning you can claim multiple assets as long as each individual asset costs less than the relevant threshold. It also applies to both new and second-hand assets.

What are the current rules for 2025–26?

For the 2025–26 financial year (1 July 2025 to 30 June 2026), the rules are as follows:*

• The threshold is $20,000 per asset (excluding GST if your business is GST-registered)
• Your business must have an aggregated annual turnover of less than $10 million
• The asset must be first used, or installed and ready for use, for a business purpose before 30 June 2026
• Your business must elect to use the simplified depreciation rules in its tax return for the 2025–26 income year—without this election, the write-off is not available regardless of whether other conditions are met
• The scheme covers both new and second-hand assets

Important: Simply purchasing or ordering an asset before 30 June is not enough. The ATO requires that the asset must be physically in use, or installed and ready for use, by that date. If equipment is ordered in June but delivered in July, the deduction moves to the following financial year.

What are the key dates for asset cost thresholds?

The instant asset write-off threshold has changed many times over the years. Here’s the full history:*

• $20,000 (From 1 July 2026 onwards)
• $20,000 (1 July 2025 – 30 June 2026)
• $20,000 (1 July 2023 – 30 June 2025) 
• No cap (7.30pm 6 October 2020 – 30 June 2023)
• $150,000 (12 March 2020 – 30 June 2021)
• $30,000 (7:30pm 2 April 2019 – 11 March 2020)
• $25,000 (29 January 2019 – before 7.30pm 2 April 2019)
• $20,000 (7.30pm 12 May 2015 – 28 January 2019)
• $1,000 (1 January 2014 – 7.30pm 12 May 2015)
• $6,500 (1 July 2012 – 31 December 2013)
• $1,000 (1 July 2011 – 30 June 2012)

A note on future thresholds: Following the 2026 federal budget, the government has announced that the $20,000 threshold will be made permanent, meaning the previously scheduled reversion to $1,000 from 1 July 2026 will no longer occur. Small businesses can now plan asset purchases with greater certainty.

What does this mean for hospitality venues?

The instant asset write-off encourages hospitality businesses to invest in their operations now rather than later. By claiming the full cost of an eligible asset upfront, you may reduce your taxable income for the current financial year, which means a lower tax bill and more cash available to reinvest in your business.

Examples of tax-deductible assets for hospitality businesses

The write-off only applies to depreciating assets, items with a limited useful life that can be expected to decline in value over time. Examples relevant to hospitality include:

• Tools and equipment e.g. microwaves, coffee machines, fridges, bar equipment (each unit must be under $20,000)
• Technology  e.g. computers, laptops, tablets, bump screens, printers, and EFTPOS terminals
• Furniture  e.g. chairs, tables, sofas
• Motor vehicles  e.g. cars, motorcycles, and delivery vans. Note that certain passenger vehicles are subject to a car limit of $69,674 for 2025–26, meaning the deductible cost for depreciation purposes may be capped at that amount, even if the vehicle costs more. The limit generally applies to passenger vehicles designed to carry less than one tonne and fewer than 9 passengers, meaning some vehicles, including certain utes and vans, may not be subject to this limit. Check the ATO guidance or speak with your accountant for vehicle-specific treatment.

What are the exceptions?

As the scheme only covers depreciating assets, the following are excluded:

• Capital works e.g. structural improvements, renovations that change the layout or function of a space
• Horticultural plants e.g. a grapevine or herb garden
• Intangible assets e.g. a franchise or trademark
• Assets leased out for more than 50% of the time on a depreciating asset lease
• Land and buildings

For the full list of excluded assets, visit theAustralian Taxation Office (ATO) website and review its guidance on instant asset write-off eligibility and exclusions.

How does an instant asset write-off work?

Here’s a practical example of how the write-off can reduce the taxable income of a hospitality business under today’s rules.

Example:

A café in Melbourne has an annual turnover of $1.8 million. In October 2025, the owner decides to upgrade some equipment and technology:

• A new commercial coffee machine for $9,500
• A replacement fridge for $7,200
• Two new iPads for the POS system for $2,400
• A second-hand prep bench for $4,800

Each of these assets is under the $20,000 threshold, and the café’s turnover is under $10 million, so all four items are eligible. The total immediate deduction is $23,900, claimed in the 2025–26 tax return.

If one of the purchases—say, a new commercial oven—cost $28,000, that item would not qualify for an instant write-off. Instead, it would generally be added to the small business general pool and depreciated at 15% in the first year and 30% in each subsequent year.

Example assumes each asset was first used or installed ready for use for business purposes before 30 June 2026 and that the café elected to use the simplified depreciation rules.

How to apply for an instant asset write-off

The instant asset write-off is claimed as a deduction in your annual tax return. There is no separate application process.

What information is required?

When completing your return, you will need to:

• Confirm your aggregated turnover is under $10 million
• Elect to use the simplified depreciation rules for the 2025–26 income year
• List the number of assets you are claiming
• Record the total value of your instant asset write-off deduction, the sum of all eligible assets purchased and used between 1 July 2025 and 30 June 2026

You must also hold an ABN or ACN and keep proof of purchase (receipts and tax invoices) for every asset claimed.

Make the most of it before 30 June

The Government has announced it will make the $20,000 instant asset write-off a permanent feature of the Australian tax system. Any eligible asset purchased and in use before the end of this financial year (30 June) can be claimed in your 2025–26 tax return and may reduce your taxable income.

If you’ve been putting off upgrading kitchen equipment, POS hardware or furniture, it’s worth considering this now. Just remember the asset needs to be in use before the deadline, not simply ordered, so build in enough time for delivery and setup.

Before committing to any significant purchase, loop in your accountant. A short conversation at the right moment can mean the difference between a clean claim and a missed one.