iscoverThe Tax Institute, along with the wider tax community, is pushing for the permanency of the instant asset write-off measure to provide reprieve for small businesses.
‘Inefficient, complex, unnecessary’: The Tax Institute calls for IAWO permanency
18 November 2025
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8 minute read
The Tax Institute has welcomed the extension of the instant asset write-off (IAWO) measure for another 12 months, yet believes it is an ongoing issue needing a permanent place within the tax system.
The Senate Economics Legislation Committee (Committee) launched an inquiry and report on the Treasury Laws Amendment (Strengthening Financial Systems and Other Measures) Bill 2025 (Bill) with a proposal to amend the Income Tax (Transitional Provisions) Act 1997 (Cth) to extend the $20,000 instant asset write-off by 12 months until 30 June 2026.
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This amendment would allow small businesses, with an aggregated annual turnover of less than $10 million, to immediately deduct the full cost of eligible depreciating assets costing less than $20,000 that are first used or installed ready for use for a taxable purpose on or before 30 June 2026.
The Tax Institute provided a submission to the Committee focused on Schedule 7, which captured the proposed extension of the IAWO.
According to the institute, the extension was welcome, yet still fell short of what was necessary to help grappling small businesses.
“The proposed temporary increase in the IAWO threshold for small business entities is an ongoing issue in our tax system that creates uncertainty for taxpayers, their advisers and indeed, the administrator,” the institute said.
“We consider that this measure should be a permanent feature of Australia’s tax system. We also recommend permanently increasing the IAWO threshold to $30,000 and expanding business eligibility to include businesses with an aggregated turnover of less than $50 million.”
It was also noted by the institute that the regular amendments to extend the measure temporarily had created ongoing uncertainty for businesses, and often occurred late in the financial year.
“We consider that it 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.”
Based on this and the other multiple proposed amendments to the IAWO and extensions that had been made over the years since 2015, the institute said enough was enough.
The submission noted the trend of annually making temporary changes to the rules governing whether a business could immediately deduct the cost of eligible depreciating assets was “inefficient, complex, and unnecessary”.
Therefore, implementing a once-off amendment to the legislation to make the IAWO a permanent feature would provide a level of certainty to taxpayers and their advisers, as well as free up time for the government to direct its focus elsewhere.
“A permanent measure would also be a more effective incentive for small businesses to invest in eligible assets, contributing to the growth of Australia’s economy.”
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