The instant asset write-off is permanent now. What that does to your add-backs

Two things happened here and only one of them made the news.

The first is straightforward good news. The $20,000 instant asset write-off is now law on a permanent basis from 1 July 2026, for small businesses with aggregated turnover of less than $10 million, announced in the 2026-27 Budget on 12 May 2026. The $20,000 limit applies per asset, so several assets can each be written off in the year they are first used or installed ready for use.

No more year to year uncertainty about whether it will be extended. For anybody buying utes, plant, tooling or fit out, that is a genuinely useful thing to be able to plan around.

The second thing is what it does to the way your profit reads to a buyer, and nobody mentions that one until it is already in the accounts.

The mechanism

You buy $60,000 of equipment across three assets under the threshold. You deduct the lot in the year you buy it. Your taxable profit for that year drops by $60,000, and your tax bill drops accordingly.

Now sell the business two years later. A buyer, or their accountant, looks at three years of profit. One of those years has a $60,000 hole in it that has nothing to do with how the business traded.

If the appraisal works from a multiple of earnings, and the earnings figure used has not been normalised for that deduction, you have handed back a multiple of $60,000 to save tax of considerably less.

Why this is fixable and routine

Because it is exactly what normalisation is for.

A normalised earnings figure adjusts reported profit for items that are real for tax but do not reflect the trading performance a new owner would inherit. Accelerated depreciation is one of the cleanest examples, because the asset still exists, it still has useful life, and the deduction was a timing choice rather than an operating cost.

The adjustment is standard, buyers' accountants expect to see it, and it is easy to defend, because the invoice and the asset are both there to look at.

What is not defensible is an add-back with no working behind it. "We bought some gear" is not a normalisation. The asset register, the invoice dates, the amounts and the treatment are.

What to actually do

Keep the asset register current. Date, description, cost, date first used or installed ready for use, and how it was treated. This is a five minute a month habit and it is the difference between a defensible add-back and an argument.

Separate the tax decision from the value decision. Claim what your accountant advises you to claim. That is a cash flow question and it belongs with them. Then make sure the appraisal treats it properly, which is a separate exercise with a different purpose.

Do not buy equipment to reduce a tax bill in the year before you sell. It is a poor trade. You spend real cash, you depress the profit a buyer prices, and you get a deduction. If the equipment is needed, buy it. If it is being bought for the deduction, you are paying a multiple to save a fraction.

The part worth repeating

A permanent write-off removes uncertainty and that is a real improvement for owners. It also means the effect on reported profit is now a permanent feature of small business accounts rather than a periodic one.

Which means every appraisal from here on has to handle it properly, and every owner should be able to see the line where it was handled. If you are shown a number and not the workings, ask for the workings.