1. Where the $1k cap stands today
After months of parliamentary ping‑pong, the Treasury Laws Amendment (Support for Small Business) Bill 2025 is still stalled in the Senate. Until it passes, the threshold for the simplified depreciation rules remains at < $1,000 ex‑GST per asset purchased between 1 July 2025 and 30 June 2026.
Key point: Even if the Bill lifts the cap (Labor proposes $20k) the change will not be retrospective. Purchases made now only get an immediate deduction on the first $999, the balance is depreciated over the asset’s effective life.
Table 1: Instant Asset Write‑Off Deduction Limits for FY 25/26 (≤ $1,000 Cap)
(Figures are illustrative only. Not tax or accounting advice.)
Source: Explanatory Memorandum, TLSA Bill 2025 update 29 July 2025.
2. Cash‑flow hit in plain numbers
For a company taxed at 25%, losing the upfront deduction on a $45k machine adds $11,000 in current‑year tax compared with the old $20k limit incentive enough to explore finance.
3. Four funding plays to blunt the tax drag
Table 2: Comparing SME Funding Strategies to Offset the Reduced Write‑Off Cap
(Seek professional advice before choosing a facility. JBF Solutions provides credit assistance, not taxation advice.)
4. Timing hacks before 30 June 2026
- Progress‑payment finance: draw down on invoices so “first‑used” date occurs after legislation (if) changes.
- Sale‑and‑leaseback: purchase now, refinance within 90 days to restore capital once rules settle.
- Bundle wisely: split upgrades into sub‑$1k items where feasible; each qualifies separately.
5. Case study — Brisbane electrical contractor
Emma, sole director, buys a $38k hybrid van on 15 Aug 25 via a 60‑month chattel mortgage, 25% balloon.
Tax effect: Immediate write‑off limited to $1k; $37k depreciates at 15% DV = $5,550 in Year 1.
Monthly: $525 repayments; claims interest + depreciation vs lump‑sum write‑off.
Result: Cash preserved; balloon due in 2030.
6. Quick checklist
- ATO asset codes: some tools depreciate faster; squeeze value there.
- Pre‑approval now: supply chains may delay delivery past cut‑off.
- GST method:cash vs accrual alters net cost when financing.
7. Bottom line
Treat the $1k cap as reality and structure finance to maintain liquidity. Smart use of balloons, leases and green loans keeps projects moving while Canberra dithers.
Disclaimer: The information above is general in nature. It doesnot constitute personal tax, accounting or financial advice and is provided in accordance with NCCP obligations. Speak with a qualified tax professional for personalised guidance.
8. Bottom line
A hold is not the finish line. Use July’s pause to audit your loan, build buffers and line‑up a refinance so you can pounce the moment rates head south.
Want custom numbers?Call with JB at JBF Solutions, we’ll model your repayments under three rate scenarios.
JB Fremy is the founder of JBF Solutions with 20+ years of experience in finance, technology and business operations. All articles are written by JB and reflect practical, experience-based insights.