The Albanese Government has made the $20,000 instant asset write-off a permanent feature of the tax system, ending years of temporary extensions as new figures show the number of actively trading Australian businesses has climbed to a record high.
The measure allows eligible small businesses with aggregated annual turnover of less than $10 million to immediately deduct the business portion of eligible depreciating assets costing less than $20,000, rather than writing the cost off over several years.
The permanent arrangement applies from 1 July 2026 and the threshold operates on a per-asset basis, meaning a business can claim immediate deductions for multiple qualifying purchases in the same financial year.
For a tradie, that could mean tools or equipment. For a professional services business, it could cover computers or technology, while manufacturers and other operators could use the concession for eligible machinery or equipment below the threshold.
Importantly, the measure is a tax deduction rather than a $20,000 cash payment. Businesses can deduct the eligible business-use portion of an asset from taxable income in the year it is first used or installed ready for use.
Treasurer Jim Chalmers said making the arrangement permanent would remove uncertainty that had frustrated businesses forced to wait each year to see whether the concession would be extended.
“The instant asset write-off is making a meaningful difference to hundreds of thousands of small businesses, that’s why we’re making it permanent for all 2.7 million eligible operators,” Mr Chalmers said.
“This is all about slashing compliance costs for small businesses, saving operators hours of time on records and red tape and incentivising investment.”
The Government estimates the permanent arrangement will provide about $890 million in additional cash-flow support over five years, reduce small-business compliance costs by around $32 million annually and save about 366,000 hours of record keeping each year.
The Government says around 300,000 small businesses claimed the instant asset write-off in 2024-25, arguing the take-up demonstrates the importance of giving businesses long-term certainty rather than extending the threshold year by year.
Small Business Minister Anne Aly said the decision would allow owners to plan investments without waiting for the federal budget each year.
“Three hundred thousand claims show just how important the Instant Asset Write-Off is to small businesses, and why this Government has made it permanent,” Dr Aly said.
“Small businesses have told us they want certainty. A permanent $20,000 write-off gives them the confidence to invest in the tools, technology and equipment they need to grow.”
The announcement comes alongside fresh Australian Bureau of Statistics data showing 2,814,778 actively trading businesses were operating across Australia at June 30, 2026.
That was a net increase of 85,130 businesses, or 3.1 per cent, during 2025-26 — the largest annual net increase across the four-year period covered by the latest ABS release.
But the headline growth figure also masks substantial turnover within the business sector.
During the year, 460,461 businesses entered the market while 375,331 exited, producing the net increase of 85,130.
The number of businesses has increased in each financial year since 2022-23. The net rise was 50,149 in 2022-23, 73,125 in 2023-24 and 66,650 in 2024-25 before accelerating to 85,130 last financial year.
Growth was particularly strong in health care and social assistance, transport and financial services.
The number of businesses operating in health care and social assistance increased 6.7 per cent during 2025-26 to 227,702, while transport, postal and warehousing businesses increased 4.9 per cent to 261,109.
Construction business numbers rose 3.4 per cent during the year. Agriculture, forestry and fishing was the only broad industry category to record a decline, falling 0.5 per cent.
Every state and territory recorded business growth during 2025-26.
New South Wales recorded the largest numerical increase with 26,057 additional businesses, followed by Victoria with 19,581 and Queensland with 19,244. Western Australia recorded the strongest percentage increase, with business numbers rising 4.6 per cent.
The Government describes Australia as having more than 2.7 million small businesses, representing about 98 per cent of active businesses under the commonly used turnover definition. The Australian Small Business and Family Enterprise Ombudsman also puts the number at about 2.7 million.
Separate Australian Securities and Investments Commission figures are also showing unusually strong company registrations.
ASIC recorded 44,040 new companies in July, the highest monthly figure in its available series, following 43,393 registrations in June.
The figures are slightly different from numbers contained in some government material circulating with the latest announcement, which put June registrations at 42,393. ASIC’s official company registration table records the June figure as 43,393.
July’s 44,040 registrations included 16,984 in New South Wales, 10,683 in Victoria, 9,262 in Queensland and 3,771 in Western Australia.
Treasury said the June and July results were the first two months since ASIC’s records began in 1999 in which more than 40,000 new companies were registered in a single month.
However, ASIC company registrations and ABS business counts measure different things.
A newly registered company is not necessarily the same as a newly operating small business, while many small businesses operate as sole traders, partnerships or through other structures. The ABS measure covers actively trading businesses and specifically warns that its count differs from the total number of entities holding an Australian Business Number.
The permanent write-off also does not mean every asset costing $20,000 or less automatically qualifies.
The threshold is for assets costing less than $20,000, and only the business-use proportion can be claimed immediately. Eligibility depends on the business meeting the relevant simplified depreciation requirements and the asset being used or installed ready for use for a taxable purpose.
Assets costing $20,000 or more cannot be immediately deducted under the concession and are instead generally dealt with under the small-business depreciation rules.
The decision to make the concession permanent addresses one of the most persistent complaints from small-business groups, which had repeatedly argued that one-year extensions made it difficult for businesses to make longer-term investment decisions.
The $20,000 threshold has been repeatedly extended in recent years rather than permanently embedded in the tax system.
The Government included permanency in its 2026-27 Budget as part of a broader package of business tax changes, including permanent two-year loss carry-back arrangements, support for startups and measures aimed at reducing regulatory costs.
Mr Chalmers said the Government was attempting to make it easier for businesses to invest while reducing the administrative burden associated with the tax system.
“Small businesses make a huge contribution to our country and our economy and we’re backing them through the budget with more cost of living help, more tax breaks and support to scale up and grow,” he said.
The permanent $20,000 threshold has nevertheless become another point of difference between Labor and the federal Coalition.
Opposition Leader Angus Taylor has backed a considerably larger permanent concession, with the Coalition proposing to increase the instant asset write-off threshold to $50,000 for businesses with turnover below $10 million.
Mr Taylor reiterated that position in Parliament this month, saying the Coalition wanted a $50,000 permanent threshold to give small and family businesses greater capacity to invest.
That leaves both major sides of federal politics supporting a permanent instant asset write-off, but disagreeing over how generous it should be.
Labor has settled on $20,000, arguing it provides a balance between encouraging investment, improving cash flow and containing the cost to the budget.
The Coalition says $50,000 would better reflect the cost of equipment businesses increasingly need to purchase.
For small businesses, however, the most immediate change is the removal of the annual uncertainty.
Instead of watching each federal budget to find out whether the concession will survive for another financial year, eligible operators can now make investment decisions knowing the $20,000 per-asset threshold is intended to remain a standing part of the tax system.
And with ABS figures showing more than 85,000 additional actively trading businesses in just one year and ASIC recording consecutive months of record company registrations, the policy arrives at a time when the number of Australians operating or starting businesses continues to climb.
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