Backing business investment (BBI) and Instant Asset Write Off (IAWO) 2026
Backing business investment—Accelerated depreciation
Eligibility
Who is eligible?
Businesses with an aggregated turnover of less than $500 million in the year they're claiming the deduction.
Eligible Assets
The depreciating asset:
is new and not previously held by another entity (other than as trading stock),
is first held on or after 12 March 2020; however, if the asset is first held between 7.30 pm (AEDT) on 6 October 2020 (2020 budget time) and 30 June 2022 you must use Temporary Full Expensing.
is not entitled for temporary full expensing or instant write-off rules.
Assets that not eligible
second-hand depreciating assets,
some specific Division 40 assets (low value and software development pools),
certain primary production assets,
buildings and other capital works for which you can deduct amounts under Division 43, or
other specific capital asset and expense deductions.
There is no limit on the cost of an eligible asset unless it is a passenger vehicle.
Working out the deduction
Different rules apply when calculating your deduction, depending on whether you are using the simplified rules for capital allowances for small businesses.
Simplified Business Entity (SBE):
Aggregated turnover >$10 million and use the simplified depreciation rules.
Asset cost is $150,000 or more (and not subject to temporary full expensing) and is added to the general small business pool.
The depreciation rate is 57.5% (rather than 15%) of the business portion of a new depreciating asset in the year you add it to the pool.
In later years the asset will be depreciated under the general small business pool rules.
Non-Simplified Business Entity (SBE):
Aggregated turnover >$500 million and do not use the simplified depreciation rules (and not subject to temporary full expensing).
Eligible assets that cost $150,000 or more.
The amount your entity can deduct in the income year the asset is first used or installed ready for use is:
50% of the cost (or adjustable value where applicable) of the depreciating asset.
plus the usual depreciation percentage at a reduced rate of 50%.
Enhanced Instant Asset Write Off (IAWO)
Eligibility
Who is eligible?
Businesses with an aggregated turnover of less than $500 million in the year they're claiming the deduction. Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset.
Eligible Assets
for assets used or installed ready to use between 12 March 2020 until 30 June 2021.
cost of an asset is $150,000 (up from $30,000) for which an immediate deduction can be claimed.
A car limit applies to the cost of passenger vehicles (except a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than nine passengers. The car limit is:
$57,581 for the 2019–20 income year
$59,136 for the 2020–21 income year
Assets that not eligible
an asset that has previously applied temporary full expensing.
assets that are leased out, or expected to be leased out, for more than 50% of the time on a depreciating asset lease.
assets allocated to the low-value pool, software development pool.
horticultural plant
assets used in research and development (R&D) activities
capital works, including buildings and structural improvements
