New Financial Year ATO & Tax Updates
$20,000 Instant Asset Write Off
The Government has recently introduced legislation to make the $20,000 instant asset write-off permanent for eligible small businesses, as announced in the 2026 Federal Budget.
If enacted, the changes would:
permanently set the instant asset write-off threshold at $20,000 (instead of $1,000) for eligible depreciating assets first used, or installed ready for use, for a taxable purpose from 1 July 2026; and
permanently set the general small business pool threshold at $20,000 from 1 July 2026.
The changes would also further suspend the ‘lock-out rule’ until 30 June 2027.
What is the ‘lock-out rule’?
This rule would otherwise prevent a business that has chosen not to use the simplified depreciation rules from re-entering the regime for five years.
ATO Warning On Home Occupancy Expenses
The ATO has identified that some taxpayers are incorrectly claiming rent, mortgage interest and other occupancy expenses as part of their work-from-home expenses.
Occupancy expenses are generally considered private or domestic expenses and can only be claimed in limited circumstances.
To claim occupancy expenses, a taxpayer must be able to demonstrate that:
the area of their home used for work has the character of a ‘place of business’;
if they are an employee, it was necessary for them to work from home because their employer did not provide an alternative place of business; and
the nature of their income-earning activities requires them to have a place of business.
Factors that may indicate whether an area has the character of a ‘place of business’ include whether the area is:
clearly identifiable as a place of business;
not readily capable of private or domestic use;
exclusively or almost exclusively used for carrying on a business; and
used regularly for client or customer visits.
Taxpayers who are eligible to claim occupancy expenses can generally claim a portion of those expenses based on factors such as floor area and the period the area was used for work.
Not sure how these tax updates apply to you?
Tax rules can vary depending on your individual or business circumstances. If you have questions about the changes above or your tax obligations, our Accounting team is here to help.