The single biggest mistake we see small business owners make at tax time is treating it as a reporting job done after year end. By then, most of the levers that reduce your tax have already closed. The concessions that matter, including the instant asset write-off and bringing deductions forward, only work if you act before 30 June. Here is how to use the main ones, and why the timing is everything.
Turn business assets into an immediate deduction
The instant asset write-off lets an eligible small business claim an immediate deduction for the cost of an eligible depreciating asset in the year it is first used, rather than depreciating it over several years. To qualify:
- Your business must have an aggregated annual turnover of less than $10 million.
- The asset must cost less than the threshold (GST-exclusive if you are registered for GST, GST-inclusive if you are not).
- The asset must be first used or installed ready for use for a business purpose within the income year, not merely ordered or paid for.
- It applies to both new and second-hand assets, and the limit applies per asset, so you can write off multiple assets.
- You can only claim the business-use portion, you must elect to use the simplified depreciation rules, and you must keep records to support the claim.
A word of caution on the threshold, because it is currently in flux. The $20,000 threshold is settled law for the 2025-26 year, for assets first used or installed ready for use by 30 June 2026. For the 2026-27 year onwards, the Government announced in the May 2026 Budget that it will make the $20,000 threshold permanent, but as at the time of writing this is not yet law, and the standing legislated threshold reverts to $1,000 until the enabling legislation passes. Before you rely on a $20,000 write-off for a current-year purchase, confirm the threshold that actually applies. As your accountant, that is something we check for you.
Assets costing $20,000 or more are not lost. They go into the small business depreciation pool and are deducted at 15% in the first year and 30% each year after. If the pool balance falls below the threshold at year end, the remaining balance can be written off in full.
Claim the small business income tax offset
If you run an unincorporated small business, there is a separate concession worth knowing. The small business income tax offset:
- Is available to sole traders, and to individuals with a share of net small business income from a partnership or trust, where aggregated turnover is less than $5 million.
- Is worth 16% of the tax payable on your net small business income, capped at $1,000 per person each year.
- Is not available to companies, and is calculated automatically by the ATO from your tax return, so the key is reporting your business income correctly.
Bring deductions forward before 30 June
Timing rules mean a deduction claimed in June can be worth 12 months more to your cash flow than the same deduction in July. Options to review before year end include:
- Prepaying expenses. Small businesses can generally bring a deduction forward by prepaying eligible expenses where the service period is 12 months or less and ends in the next financial year, such as insurance, rent, or subscriptions.
- Writing off genuine bad debts. To claim a bad debt deduction, the amount must have been included in your assessable income in an earlier year, and you must make a genuine decision to write it off, recorded before 30 June. A debt that is merely doubtful is not enough.
- Reviewing trading stock. Value your stock correctly at year end and deal with any obsolete stock, as this affects your taxable position.
- Personal super contributions. Personal deductible super contributions must be received by the fund before 30 June and stay within your concessional cap to be deductible this year. Note that from 1 July 2026, Payday Super requires employers to pay super guarantee on payday, which changes the old approach of timing quarterly employer super around 30 June.
Why timing matters: act before, not after
Almost every one of these levers closes at 30 June. Once the year has ended, your accountant can only report what already happened, not reshape it. The final quarter, April to June, is where real tax planning takes place. Good record keeping through the year is what makes it possible, because you cannot plan around numbers you do not have. The businesses that pay the least tax are not the ones with the cleverest tricks, they are the ones that sit down with their accountant before year end, not after.
How MS Financial Services can help
We review your position before 30 June, identify eligible asset purchases and deductions, confirm the thresholds that currently apply, and make sure every claim meets ATO rules. Our Tax & Compliance and Business Advisory teams handle the planning, while our Accounting & Bookkeeping service keeps your records ready for it. To put a plan in place before the next 30 June, get in touch with our team.
Frequently Asked Questions
What is the instant asset write-off threshold right now?
The $20,000 threshold applied for the 2025-26 year. From 1 July 2026 the Government has announced a permanent $20,000 threshold, but until that legislation passes the standing threshold is $1,000. Always confirm the current threshold before relying on it for a purchase.
Can I instantly write off a car?
Most passenger cars cost well above the write-off threshold, so they cannot be written off instantly, and passenger vehicles are also subject to the car limit ($69,674 for 2025-26). Eligible assets under the threshold, and some commercial vehicles, can qualify. Assets over the threshold go into the small business pool.
Is the small business income tax offset the same as a deduction?
No. A deduction reduces your taxable income, while the offset reduces the tax payable on your small business income directly, by up to $1,000. The ATO works it out from your return.
Do I get the deduction just by ordering an asset before 30 June?
No. Ordering or paying is not enough. The asset must be first used or installed ready for use for a business purpose by 30 June to be claimed in that year.
Can prepaying expenses really reduce my tax?
Yes, within the rules. Small businesses can generally bring forward a deduction by prepaying eligible expenses with a service period of 12 months or less that ends in the next financial year. The rules have nuances, so it is worth checking each prepayment with your accountant.