The latest instant asset write-off extension earned a lukewarm response from small business advocates and tax experts, who maintain the incentive should become a permanent part of Australia’s tax system.
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Legislation containing the write-off, which allows small businesses to instantly deduct the value of eligible purchases below $20,000, passed the Senate last week in the final parliamentary sitting day of 2025.
Without intervention, small businesses would have been able to instantly deduct purchases worth just $1,000 in the 2025-26 financial year.
The Council of Small Business Organisations (COSBOA) on Monday joined Chartered Accountants Australia and New Zealand (CA ANZ) in welcoming the tax break, while calling for greater incentives and permanent timeframes.
“The current $20,000 threshold falls well short of supporting meaningful upgrades in equipment, vehicles, technology and digital tools,” wrote COSBOA chair Matthew Addison.
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The organisation maintains a $150,000 asset threshold on a permanent, ongoing basis would provide a greater benefit to small businesses.
“Small businesses want to invest in machinery, digital systems and equipment that improves how they operate,” he continued.
“We therefore need a threshold that enables genuine productivity investment, not token purchases.”
Fears for ongoing uncertainty
In its response to the bill’s passage, CA ANZ tax and superannuation leader Susan Franks said revisiting the measure on a yearly basis adds an extra compliance toll.
CA ANZ is not the only body to argue as much.
In an earlier submission to the Senate Economics Legislation Committee, the Tax Institute said the policy’s stop-start nature limits its effectiveness.
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The bill’s passage halfway through the financial year was relatively early compared to recent years, in which legislative backing for the small business tax break came just days before the end of the financial year.
“Regular amendments to extend the measure on a temporary basis have created ongoing uncertainty for businesses, and often occur late in the financial year to which the IAWO extension relates,” it said.
This is “counterproductive to the policy of encouraging investment and productivity, particularly where the extension is given effect late in the year and only serves to confirm the tax treatment of earlier dealings”.
Last-minute amendment knocked back
Before the bill’s passage, Labor senators, with support from the Greens, successfully knocked back an amendment from Independent Tasmanian Senator Tammy Tyrrell to lift the threshold to $30,000 and extend the policy into 2030.
Labor has long argued that year-long extensions are appropriate, as they allow the government of the day to respond to present economic conditions.
The Albanese government confirmed its support for the $20,000 extension in April this year, after delivering a federal budget Treasurer Jim Chalmers said would “help finish the fight against inflation”.
For the government, a policy encouraging even greater small business spending could be difficult to reconcile with recent inflation data showing that the battle is hardly over.
But Tyrrell’s proposed amendment had support from the Coalition, which went to the 2025 federal election with a pledge to make instant $30,000 asset deductions a permanent part of the tax system, along with independents, including Senators David Pocock and Fatima Payman.
