$20K instant asset write-off: time to plan your asset purchases 

Good news for small businesses, the $20,000 instant asset write-off has been approved by both houses of Parliament and is just awaiting Royal Assent for FY2025-26. 

If you’ve been putting off buying that new machinery, tools, or equipment, now is the time to plan. With six months until 30 June 2026, smart planning could deliver significant tax savings. 

 

What’s changed? 

The instant asset write-off threshold has been extended for the 2025-26 financial year. 

This means eligible small businesses can immediately deduct the full cost of each asset costing less than $20,000, rather than depreciating it over several years. 

Who’s eligible? 

• Businesses with aggregated annual turnover less than $10 million 

• Applies to sole traders, partnerships, companies, and trusts 

 

How It Works 

Per asset, not total: You can claim multiple assets the $20,000 limit applies to each individual asset, not your total purchases. 

Example: Buy a $12,000 commercial generator, $8,000 computer software, and $6,000 printer in tools = $26,000 immediate deduction in FY26. 

Timing matters: 

• Asset must be purchased and installed ready for use by 30 June 2026 

• Ordered in June but delivered in July? No deduction available in 2026FY 

• Purchased in June but not installed? May not qualify 

GST exclusive: If you’re registered for GST, the $20,000 threshold is the GST-exclusive price. So a $22,000 including GST item ($20,000 + $2,000 GST) still qualifies. 

 

What Assets Qualify? 

Yes: ✓ Machinery and equipment ✓ Office furniture and computers ✓ Tools and work equipment ✓ Commercial kitchen equipment ✓ Retail fit-out items ✓ Technology and software (including purchased software, but not subscriptions) ✓ Manufacturing equipment ✓ Trade vehicles (utes, vans)  

No: ✗ capital works, including buildings and structural improvements. ✗ Assets that are leased out, or expected to be leased out, for more than 50% of the time on a depreciating asset lease. ✗ Assets used in your R&D activities. ✗ Software allocated to software development pool.  

 

What about assets over $20,000?  

If an asset costs $20,000 or more, it goes into your small business depreciation pool and is depreciated at 15% in the first year, then 30% each year after. 

 

Why early planning matters 

1. Avoid the June rush-Suppliers get slammed in May/June with businesses scrambling to get assets delivered and installed. Plan now for 

• Better prices (unless you can secure a better deal EOFY sale) 

• Secure stock and delivery slots 

• Ensure installation is completed in time 

• Have the asset working for you for longer 

2. Cash flow management-Spreading purchases across January to June is easier on cash flow than a $50,000 spend in the last week of June. 
3. Genuine business needs-With time to plan, you’ll make better commercial decisions rather than rushed purchases just to “use up” the deduction.  
4. Time to explore finance optionsIfyou’re financing equipment, you need time to arrange loans or leases. Starting in June is too late. 

 

Common mistakes to avoid 

❌ Buying assets you don’t need – Tax savings don’t justify wasteful spending. A $20,000 deduction saves you $5,000 in tax (at 25% company tax rate) but costs you $20,000 in cash. 

❌ Ordering too late – If delivery or installation slips to July, you miss FY26 entirely. 

❌ Not keeping invoices and evidence – You need proof of purchase date and when it was ready for use. 

❌ Claiming assets not yet in use – Delivered but sitting in a box unopened? Not deductible until it’s installed and ready for use. 

❌ Not maintaining logbooks for work vehicles – If you provide an employee (including directors) with a vehicle that they can use for private, it is strongly recommended to maintain a logbook to maximise your tax savings (see above article re: logbooks). 

 

Strategic planning: what to consider now 

1. Review your asset needs – Ask yourself and check in with employees in regard to: What’s worn out, obsolete, or holding your business back due lack of efficiency? (a simple example could be a slow 4 year old laptop may impact your marketing team ability edit videos fast enough) 

1. Prioritise and budget – List assets you need, get quotes, plan your cash flow 

1. Consider timing – Can you stage purchases across the next 6 months? 

1. Check eligibility – Confirm your aggregated turnover is under $10 million 

1. Plan for installation – Some assets need professional installation, setup, or testing 

1. Talk to us – We can help you model the tax impact and optimise timing 

Questions to ask yourself: 

• Will this asset improve productivity or revenue? 

• Would I buy this regardless of the tax deduction? 

• Can I afford it without compromising cash flow? 

• Is now the right time, or should I wait for newer models/better prices? 

 

What if you’re over the $10M threshold? 

Businesses with turnover over $10 million use the standard depreciation rules: 

• Most assets depreciate using their effective life (e.g., computers 3 years, car 8 years) 

• Still get the same amount of deduction, it’s just spread over longer periods. 

Even without instant write-off, planning helps you maximise depreciation claims for FY26. 

Why maintaining a logbook is a great idea and an ideal time to start now? 

Whether you are claiming work car expenses on your tax return or managing FBT on business vehicles, a logbook could save thousands. January is the perfect time to start one and here is why it matters for both individuals and businesses. 

 

For Individuals & Sole Traders: Two ways to claim 

Cents per kilometre method: 

• Capped at 5,000 km × 88c = maximum $4,400 claim 

• No logbook needed but need to document how you came up with the business KM figure 

• Only available to individuals and sole traders 

Logbook method: 

• Claim business % of ALL actual car costs (fuel, rego, insurance, servicing, depreciation, loan interest) 

• Example: 70% business use on $15,000 total costs = $10,500 deduction 

• That’s $6,100 more in deductions – potentially $2,000+ tax saved 

• Must keep logbook for 12 consecutive weeks (valid 5 years) 

Who should use logbook method? 

• Driving more than 5,000 business km per year 

• High car expenses 

• Companies/trusts (cents per km not available) 

 

For Businesses: Logbooks may reduce your FBT tax payable or Employee contribution amount 

If your business provides cars to employees (including yourself as owner/director), you are paying FBT or making an employee contribution to reduce your FBT. A logbook can significantly reduce this cost. 

Two FBT calculation methods: 

1. Statutory formula method (no logbookrequired)

• FBT based on car’s cost × statutory 20% 

• Problem: Even if the car is used 90% for business, you are paying FBT on a high percentage of the car’s value 

• Cannot be used for non-car vehicles with private use portion (e.g. Ute with carry load of 1 tonne or more) 

2. Operating cost method (requires logbook)

• FBT based on actual private use % 

• If logbook shows 15% private use, you only pay FBT on 15% of operating costs 

• Much lower FBT when business use is high 

Example: Company car worth $50,000, total running costs $12,000/year 

• Statutory method: FBT on ~$10,000+ (20% × $50,000) = ~$9,400 FBT 

• Operating cost method (if 85% business use): FBT on $1,800 (15% × $12,000) = ~$1,700 FBT 

• Saving: $7,700 per year with a simple logbook 

 

What you need to record (12 consecutive weeks) 

For each journey during the 12-week period: 

• Date 

• Odometer start and end readings 

• Total kilometres 

• Purpose (e.g., “Client meeting – ABC Pty Ltd”, “Site visit”) 

Plus, odometer readings at start and end of the 12-week period. 

Critical: Record ALL trips (business AND private) so you can calculate the business/private split. 

 

Should I maintain a logbook if my vehicle is 100% business use? 

Short answer: Yes, you should still maintain one. 

Many business owners believe their work vehicle is 100% business use, but the reality is often different when you track it properly. Common “private use” trips that catch people out: 

• Stopping at the shops on the way home from a job 

• Taking the work vehicle to personal appointments 

• Using the vehicle on weekends 

• Driving to the gym before work 

• Side trips during business travel 

Without a logbook, you have no evidence to support a 100% business use claim. If the ATO audits you and finds any private use, your entire claim could be disallowed, or you could face excessive FBT assessments. 

For FBT purposes, a valid logbook showing 95% business use is acceptable but claiming 100% business use without any logbook is risky. 

 

FBT-Exempt vehicles: different rules apply 

Some vehicles can be FBT-exempt, meaning no FBT applies even if there is some private use. But the rules differ significantly between vehicle types, and many business owners get this wrong. 

Commercial vehicles (Utes, vans, trucks): 

• Can be FBT-exempt if they are designed to carry loads (one tonne+) or 9+ passengers 

• Exemption only applies if private use is minor, infrequent, and irregular 

• Examples of acceptable minor private use: driving home after work, occasional detour to drop off supplies 

• FBT DOES apply if there’s actual private use like:  

• Weekend family trips 

• Regular shopping or personal errands 

• Taking kids to school 

• Using it as the family vehicle 

• Important: Having tools or equipment in the vehicle while doing private trips does not make it business use, it is still considered private use 

Passenger vehicles (cars, SUVs designed to carry passengers): 

• Much harder to get FBT exemption 

• Can only be exempt if the vehicle is:  

• Parked at your business premises (not at home) overnight, AND 

• Not available for private use 

• Requires documentation: Written policy restricting private use, annual declarations from employees 

• If the car is taken home or available for private use (even if not actually used), the exemption fails 

Key takeaway: Just because you drive a Ute does not mean you can use it for personal trips without FBT consequences. The moment private use exceeds “minor and incidental,” FBT applies. 

A logbook protects you by showing actual use patterns and providing evidence for your FBT treatment. 

 

Business Travel vs Private: what counts? 

Business/deductible: ✓ Client meetings, site visits ✓ Travel between work locations ✓ Business errands (bank, suppliers) 

Private/not deductible: ✗ Normal home-to-work commuting ✗ Personal errands, school runs ✗ After-hours personal use 

For company cars: Private use includes personal trips by employees/directors AND their family members. 

 

Start in January: here’s why 

✓ Finish by March/April, well before EOFY and just in time for FBT year 

✓ Valid for 5 years (until 2031)  

✓ Captures normal work patterns (not holiday-affected)  

✓ Ready for tax planning conversations in April to June 

 

Make it easy: use apps (not sponsored or affiliated) 

The following apps can automatically track trips via your phone’s GPS or dedicated tracking devices for more accurate recording: 

• Driversnote 

• GoFar 

Much easier than paper logbooks, though please note these are paid products with subscription fees. 

 

Common Mistakes That Cost You 

❌ Recording only business trips (need ALL trips)

❌ No trip purpose recorded

❌ Missing odometer readings at start/end

❌ Keeping for less than 12 weeks

❌ Using expired logbook (5+ years old and pattern changed) 

 

Your January Action Plan 

1. Record odometer reading now 
2. Download an app or download logbook template online (many free ones available in Excel/Sheets or PDF format) 
3. Track ALL trips for 12 weeks 
4. Keep all car expense receipts 
5. Send completed logbook to us once completed and we will verify it is compliant and maximise your claim OR minimise your FBT 

Private use of Motor Vehicles by Employees and FBT

The ATO has turned its attention to the fringe benefits tax (FBT) implications of employees’ private use of work vehicles.

The ATO believes this is an area that is frequently overlooked by employers. 

If your business supplies work vehicles to employees, it’s essential to understand how the vehicles are being used and whether any FBT exemptions apply.  

Note: Directors are considered employees for FBT purposes even if they do not receive a wage.  

 

When FBT Applies 

FBT generally arises when a work vehicle is made available for private use, even if it is not actually used for private purposes. 

Private use includes any travel that is not directly related to the employee’s job, such as: 

• Taking the vehicle on beach or camping trips 

• School drop-offs and pick-ups (even if on the way to or from work) 

• Running personal errands (such as grocery shopping) 

• Transporting friends or family for non-work purposes 

• Parking the vehicle at the employee’s home, even if this is for security reasons 

Important: Carrying tools or work equipment in the vehicle does not change the nature of a personal trip. 

If the vehicle is driven for a personal purpose, for example, a weekend outing or a holiday, it is still private use, even if the tools stay in the back. 

 

Exemptions for certain vehicles 

Some vehicles, such as specific types of utes, panel vans, or other commercial vehicles, may be exempt from FBT if: 

Option 1: FBT law  

• Vehicle is not principally designed to carry passengers. 

• Private use is minor, infrequent and irregular (e.g. occasional dump run or moving house). “Limited to 2 or 3 occasions in an FBT year”. 

• Home-to-work travel is allowed. 

• An employer written policy or employee declaration is not required under law (but strongly recommended) 

Option 2: ATO Practical Compliance Guideline 

PCG 2018/3 gives businesses a clear compliance “safe-harbour” if you meet its rules, the ATO will generally not review your exemption. 

To qualify, all the following are required: 

• The vehicle is provided for work purposes. 

• A written policy is in place setting out the allowable private use. 

• The employee signs an annual declaration confirming their use stayed within limits. 

• The vehicle is below the luxury car tax threshold. 

• The vehicle is not salary-packaged or part of remuneration. 

• Private use is limited to: 

• Home-to-work travel with minor detours up to 2 km each way; and 

• Other private trips totalling no more than 1,000 km per FBT year, with no single return trip over 200 km. 

Regular weekend trips or holidays disqualify the exemption, even if the vehicle carries work tools or equipment. 

 

What Counts as a “Written Policy” and “Employee Declaration”?

Under PCG 2018/3, both are essential to demonstrate limited private use. 

 

Written Policy 

Your business should have a short document or email that: 

• States the vehicle is provided for work purposes only; 

• Defines what private use is permitted (e.g. home-to-work travel and small detours only); 

• Confirms personal trips must not exceed 1,000 km total or 200 km for any single trip; 

• Explains that any other personal use is not allowed (limited to the above); and 

• Requires employees to notify you if their use changes. 

This policy doesn’t need to be long, one page is enough, but it must exist and be shared with the employee. 

 

Employee Declaration 

Each FBT year, the employee should sign a simple statement confirming: 

• The vehicle was used mainly for work purposes; and 

• Any private use was within the limits set by the policy. 

You can use the ATO’s approved declaration template or your own version with the same information.
Keeping these records shows the ATO you’ve actively managed compliance — not just assumed an exemption applies. 

 

If Not Eligible for an Exemption — Valuation of Benefits 

Vehicles – Under 1 tonne carrying load (car) 

Value the fringe benefit using: 

• Statutory Formula Method; or 

• Operating Cost Method (you will need a “logbook” to be able to use this method) 

Vehicles – Over 1 tonne carrying load (non-car / residual benefit) 

Value the fringe benefit using: 

• Operating Cost Method (“logbook” method); or 

• Cents-per-km Method (if private travel is limited): 

• 0 – 2500 cc – 69 cents/km (62 c in 2026) 

• Over 2500 cc – 80 cents/km (73 c in 2026) 

• Motorcycle – 20 cents/km (18 c in 2026) 

 

Note: If you do not have a logbook for vehicles over 1 tonne and the vehicle is not eligible for an exemption, the private use percentage will default to 100% when using the Operating Cost Method.
This means the entire cost of operating the vehicle becomes taxable for FBT purposes. 

 

Common Issues Identified by the ATO 

• Treating private use as business use 

• Assuming all dual-cab utes are automatically exempt 

• No written policy or declaration when relying on PCG 2018/3 

• Poor record-keeping missing logbooks or odometer readings 

• Failing to lodge or pay FBT when required 

 

How to Manage the Risk 

1. Choose your approach: During tax planning discuss with your accountant which option you will be relying on (FBT law or ATO practical guidance). 
2. Check eligibility: confirm the vehicle design and private-use limits. 
3. Keep documentation: written policy, annual declarations and odometer readings (if required). 
4. Maintain a logbook even if you are not required to do so. It’ll give you more valuation options (depending on the car carrying load). 
5. Ask your accountant to calculate the FBT taxable value using the most appropriate valuation method: Statutory Formula, Operating Cost, or Cents-per-km, whichever yields the lowest tax outcome for your situation. 
6. Discuss with your accountant whether employee after-tax contributions can be made to reduce or eliminate the taxable value of the benefit and avoid paying FBT altogether. A very common practice. 
7. If required, lodge your FBT return by the due date and ensure any reportable fringe benefits are included on employee income statements. 

Small Business Superannuation Clearing House is shutting down – Here’s what small businesses need to know

 

What’s changing and when? 

• The ATO’s Small Business Superannuation Clearing House (SBSCH) will be closed to new users starting 1 October 2025. 

• It will fully close and stop servicing existing users on 1 July 2026. 

This is part of the wider Payday Super reform, aiming to align super payments with employee paydays 

 

Who’s affected? 

The SBSCH currently helps small employers: those with fewer than 20 employees or under $10 million turnover pay all their staff’s super in one go. It’s a free, government run service. 

 

Why it matters 

All employee’s super is required to be paid following SuperStream standards. The SBSCH has been a simple, cost-free convenience for many small businesses to meet SuperStream standards. Its closure means an increase in potential costs as you will now be forced to find for an alternative SuperStream compliant clearing houses or payroll software that may charge you fees.  

 

What you should be doing now 

Start planning early. Here’s how: 

1. Audit your current setup: do you use the SBSCH? 

1. Explore alternatives: Look at alternatives clearing houses, super fund portals or payroll software that have their own clearing houses. 

1. Update your systems: If your payroll or accounting software handles super contributions, ensure it’s ready and tested your payroll. 

1. Train your team: Ensure any staff involved understand the new process to prevent mistakes or delays. 

1. Pay super more often: If cashflow permits try bringing the super payment forward to get used. 

 

Final things to note 

Xero now offers auto super on all their consumer subscription plans making it easy to be SuperStream compliant. Check with your default super fund if they offer a free or low-cost clearing house for you to use. 

 

What is a default super fund? 

Every employer must nominate a default superannuation fund. This is the fund that receives super contributions for any employee who has not chosen their own fund and does not have an existing “stapled” fund linked to them.  

Government review of supermarket unit pricing: what it could mean for your business 

 

The Federal Government recently wrapped up a consultation on supermarket unit pricing. While it might sound like a purely consumer issue, it could have very real commercial impacts for businesses supplying into the grocery sector. 

On 1 September 2025, Treasury opened consultation on strengthening the Retail Grocery Industry (Unit Pricing) Code of Conduct. Submissions closed just a few weeks later on 19 September 2025, marking the end of a very short window for stakeholders to have their say. 

 

A Quick Recap 

Unit pricing allows shoppers to compare costs per standard measure (for example, $/100g or $/litre) across different pack sizes and brands. 

Since 2009, large supermarkets have been required to display this information to help customers spot value. Compliance costs have generally been low and penalties limited but the Government’s review signals that much tighter rules may be coming. 

 

Why Now? 

The ACCC’s recent supermarket inquiry highlighted that while unit pricing is useful, there are still significant gaps. 

The key concern is shrinkflation when pack sizes quietly reduce while prices remain the same or even increase. 

With cost-of-living pressures dominating headlines, the Government wants clearer, fairer pricing to rebuild consumer trust. 

 

What Might Change? 

Proposals considered in the consultation paper include: 

• Shrinkflation alerts – supermarkets may need to flag when a product’s pack size shrinks without a matching price cut. 

• Clearer displays – larger, more prominent unit prices both in-store and online. 

• Wider coverage – expanding the rules beyond major supermarkets to smaller retailers and online sellers. 

• Standardised measures – eliminating confusing “per roll” vs “per sheet” comparisons. 

• Civil penalties – introducing fines for non-compliance. 

 

The Commercial Impact 

• Suppliers: Packaging choices could come under closer scrutiny. Changes in size or format may trigger disclosure obligations. 

• Retailers: Potential costs in updating shelf labels, in-store signage, software, and e-commerce platforms. 

• Opportunities: Businesses that embrace transparency can build consumer trust and stand out in a competitive market. 

 

What You Should Do 

The consultation period has now closed. Treasury is reviewing submissions, and the Government is expected to announce its response later in the year. 

Businesses in food, grocery, and household goods should stay alert. The final rules could affect pricing strategies, packaging decisions, and compliance obligations across the sector. 

Keeping on top of these developments will allow your business to adapt early and potentially turn transparency into a competitive advantage. 

Is your loan interest really deductible? 

We often get asked whether interest on a loan can be claimed as a tax deduction. 

The golden rule is simple: it depends on what the money was borrowed for. 

 

Why did you borrow the money? 

• Borrow to buy a private home → no deduction. 

• Borrow to buy shares, a rental property, or a business etc → interest is generally deductible. 

 

Redraw vs Offset Accounts 

This is where people often trip up: 

• Redraw facility: Treated as a new borrowing. Deductibility depends on what you spend the redrawn money on. 

• Offset account: Treated like your savings account. Taking money out is not borrowing, so deductibility doesn’t change. 

 

Case Study: Anne vs Austin 

• Anne’s redraw: Anne paid extra into her home loan, then redrew funds to buy shares. Because the redraw is a new loan for an investment, the interest on that portion is deductible. 

• Austin’s offset: Austin parked savings in his offset account, then withdrew the money to buy shares. Because the original loan was for his private home, none of the interest is deductible. 

Same outcome financially, very different tax outcome. 

 

Parking borrowed funds in an offset 

Some clients borrow money to invest “later” but park the funds in an offset in the meantime. This is risky: 

• While in the offset, the borrowed funds aren’t producing income. 

• Worse, it may “taint” the loan, making it hard to ever claim deductions, even if you eventually invest. 

 

Key takeaway 

Loan structuring is an area where little mistakes can cause tax problems. Always check with your accountant before setting up or moving money around loan facilities. We can work with you and the bank/broker to make sure your loans are structured correctly to maximise the interest deductibility.  

ATO interest charges are no longer deductible, so what are your options? 

As we explained in the July edition of our newsletter, general interest charge (GIC) and shortfall interest charge (SIC) imposed by the ATO are no longer tax-deductible from 1 July 2025. This applies regardless of whether the underlying tax debt relates to past or future income years. 

With GIC currently at 11.17%, this is now one of the most expensive forms of finance in the market and unlike in the past, you won’t get a deduction to offset the cost. For many taxpayers, this makes relying on an ATO payment plan a costly strategy. 

 

A couple of options may help alleviate some of the pressure: 

1. Organise an interest payment plan with the ATO (discussed in our September newsletter edition). 

1. Refinancing ATO Debt (discussed below). 

 

Refinancing ATO Debt 

Businesses can sometimes refinance tax debts with a bank or other lender. Unlike GIC and SIC amounts, interest on these loans may be deductible for tax purposes, provided the borrowing is connected to business activities. 

While tax debts will sometimes relate to income tax or CGT liabilities, remember that interest could also be deductible where the borrowed funds are used to pay other tax debts incurred in the course of running a business, such as: 

• GST 

• PAYG instalments 

• PAYG withholding for employees 

• FBT 

However, before taking any action to refinance ATO debt, it is essential to carefully consider whether the interest will in fact be deductible. 

 

Individuals 

For individuals with a tax debt, the treatment of interest on borrowings used to pay that debt depends on whether the debt arose from a business activity: 

• Sole traders: If you are genuinely carrying on a business, interest on borrowings used to pay tax debts from that business is generally deductible. 

• Employees or investors: If your tax debt relates to salary, wages, rental income, dividends, or other investment income, the interest is not deductible. Refinancing may still reduce the overall cost if the new loan’s interest rate is lower than the GIC, but it won’t generate a tax deduction. 

Example:
Sam is a sole trader who runs a café. He borrows $30,000 to pay his tax debt, which arose entirely from his café profits. The interest on the loan should be fully deductible. 

However, if Sam also earns salary from a part-time job and some of his tax debt relates to that employment income, only a portion of the interest on the loan will be deductible. 

If $20,000 of the tax debt relates to his business and $10,000 relates to his wages, then only two-thirds of the interest expenses would be deductible. 

 

Companies and Trusts 

If a company or trust borrows to pay its own tax debts (income tax, GST, PAYG withholding, FBT), the interest is usually deductible because the borrowing is directly related to carrying on the business. 

However, if a director or a beneficiary borrows money personally to pay the company’s or trust’s tax debts, the interest they incur is generally not deductible to them personally, the deduction is only available to the entity that incurred the tax liability. 

Practical Takeaways 

• Avoid heavily relying on ATO payment plans as a long-term solution, GIC is now a pure cost. 

• Seek advice before refinancing ATO debts to ensure any new borrowing is structured in a way that maximises potential deductibility. 

• Keep records: the ability to trace the borrowing to the underlying business tax debt is crucial. 

• Consider cash-flow planning earlier in the year to minimise exposure to GIC and SIC.