Broking industry applauds move to make IAWO permanent

Members of the finance broking industry have applauded the Albanese government’s decision to make the $20,000 instant asset write-off (IAWO) a permanent expansion in the budget 2026–27, but some have suggested more could be done to improve the financial confidence of small businesses across Australia.

The IAWO allows small businesses (those with an aggregated annual turnover of less than $10 million) to immediately deduct the full cost of eligible depreciating assets.

While the ongoing legislated threshold is $1,000, the threshold has been higher than this in recent years. Since June 2023, the threshold has been for assets costing less than $20,000 but requires the federal government to pass legislation to extend the threshold each year.

Given that the legislation is often passed late in the financial year (the legislation passing the IAWO for FY26 only passed in December 2025, for example), members of industry have been calling for the scheme to be made permanent to give small businesses greater certainty.

The Commercial & Asset Finance Brokers Association of Australia (CAFBA) has consistently advocated for the IAWO to be made permanent on behalf of Australia’s commercial finance and small business sectors, for example.

Individual brokers have also long called for the expanded IAWO to be made permanent. Reacting to the news, asset finance broker Jill Fleck from Integrity Asset Finance said it was “a very positive move for Australian small business and the asset finance industry more broadly”.

“Making the $20,000 instant asset write-off permanent removes a significant level of uncertainty for business owners who rely on these incentives when planning equipment and vehicle purchases,” she said.

“In previous years, the delays around legislation made it difficult for businesses to confidently commit to investment decisions, particularly leading into EOFY. Greater certainty will help SMEs plan ahead with more confidence and should support stronger investment activity across key sectors of the economy.

“From a broker perspective, we expect this announcement to encourage more clients to move forward with asset purchases sooner rather than waiting to see whether the measure will be extended again.”

What more could be done to help SMEs?

However, CAFBA has said the government could go further in order to provide more “meaningful economic impact” to small businesses.

The association suggested that making the extension permanent was welcome, but that it could go further. It said that the IAWO should be increased to $150,000 and have the eligibility expanded to businesses with turnover of up to $50 million, for example.

Speaking to Broker Daily, CAFBA’s advocacy chair, David Gandolfo OAM, said: “Providing certainty around investment incentives is an important step in supporting business confidence, productivity and economic growth.

“However, we are disappointed that eligibility remains limited to businesses with annual turnover below $10 million, and the $20,000 threshold falls well short of the $150,000 limit sought by CAFBA, COSBOA and a range of other peak industry bodies.”

Similarly, CEO David Bushby added that, given the current uncertain economic environment, businesses need “certainty from government and greater tax support to invest in vehicles, equipment and productive assets that drive expansion and employment”.

“However, if the deductible threshold and turnover limits are not increased, the announced decision will fail to achieve its full economic benefit potential,” he said.

“All three changes would work together to help increase economic activity, improve viability of small business, increase productivity and would come at no budget cost over time.”

SME lenders have also been calling for the IAWO to be made permanent, with James Beeson, CEO of SME lender Earlypay, stating that “certainty drives investment”.

“If businesses know the settings won’t change year to year, they are far more likely to commit to spending that improves productivity,” he said.

“This would support investment in equipment, technology and other productivity-enhancing assets, helping businesses manage rising costs and reduce the need to pass those costs on to customers.”

Beeson has also called on the government to support SMEs in this year’s budget by including a range of other measures, such as:

• Ensuring all public sector entities pay suppliers as quickly as possible.
• Providing practical transition support for Payday Super.
• Rolling out incentives for technology adoption, energy efficiency upgrades, and modern equipment.
• Expanding access to lower company tax rates or introducing more flexible tax arrangements for smaller, cash-constrained businesses.
• Introducing targeted incentives to support SMEs to manufacture, produce, and source more domestically, particularly in critical sectors such as food production, energy, and essential goods.

What else is expected to be in the budget?

The federal budget for 2026–27 will be handed down by federal Treasurer Jim Chalmers on Tuesday evening, with several initiatives having already been previewed.

These include an extra $2 billion to provide needed infrastructure to build up to 65,000 more homes. This will reportedly deliver the roads, water and power infrastructure needed to “get housing projects over the line”, according to the Treasurer.

“Building more homes and helping more Australians get into the housing market is a big focus of the Budget that we’ll hand down on Tuesday,” he said.

Other housing reforms include funding to unlock investment in housing, energy, and critical minerals by streamlining environmental approvals.

Chalmers said: “More efficient approvals mean projects get off the ground quicker and Australians get into homes sooner. Faster approvals for projects that are in Australia’s interest, and faster knockbacks for projects that aren’t, will deliver better outcomes for investors, better outcomes for our environment and better outcomes for Australians.”

The initiative aims to support the government’s ambition of building 1.2 million “new, well-located” homes in Australia by 2029.

Media reports have also suggested that the government will bring in changes to capital gains tax and negative gearing for investors in the upcoming budget. However, the size and scope of these reported changes have been vague, and there has been no official announcement from government regarding the details of such a move.

Reports have been swirling about changes to the investor tax system since the Labor government suggested it was considering changing the discount that reduces the taxable portion of a capital gain by 50 per cent for assets held for longer than a year.

A Senate select committee’s final report – initiated by the Australian Greens – found that the longstanding capital gains tax discount (CGTD), which halves the taxable portion of gains on assets held longer than a year, is distorting investment decisions, worsening housing affordability, and contributing to inequality.

However, brokers and investors have warned that proposed changes to the capital gains tax discount could cause unintended consequences without solving Australia’s housing shortage.

[Related: Labor announces extension for instant asset write-off measure]

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