Clear thinking for better business.

From 1 July 2026, the instant asset write-off threshold is permanently set at $20,000 for eligible small business entities.

Who may be eligible?

The measure applies to small business entities with aggregated annual turnover of less than $10 million that use the simplified depreciation rules. The threshold applies to each eligible asset, including new and second-hand assets.

What needs attention?

• The asset must cost less than $20,000, and only the taxable business-use portion is deductible.
• The asset must be first used or installed ready for use in the relevant income year.
• Assets costing $20,000 or more are generally added to the small business depreciation pool.
• Invoices, payment evidence and the date the asset became ready for use should be retained.

Buying an asset solely to create a deduction rarely makes commercial sense. Start with the operational need, expected return and cash flow effect, then confirm the tax treatment.

Official guidance: ATO Community — $20,000 instant asset write-off.

For the 2026–27 income year, the resident individual rate applying between the tax-free threshold and $45,000 is 15%.

These rates exclude the Medicare levy and do not by themselves determine the most appropriate mix of salary, drawings, dividends or retained earnings. Business structure, company tax, Division 7A, superannuation and cash requirements may all affect the outcome.

A useful annual review

• Update payroll tables and PAYG withholding settings.
• Review your personal and business cash flow together.
• Model decisions before year end rather than after transactions occur.
• Confirm that any remuneration or distribution strategy fits your structure and documentation.

Legislation: Treasury Laws Amendment (More Cost of Living Relief) Act 2025.

Tax planning works best as a regular business process. Waiting until the return is due can limit the options available and create unnecessary cash flow pressure.

Build these habits into the year

1. Reconcile regularly. Match bank, card, cash and EFTPOS transactions to your accounting records.
2. Separate private and business use. Keep evidence that supports the business portion of mixed expenses.
3. Forecast tax payments. Include GST, PAYG instalments, PAYG withholding and super in the cash flow forecast.
4. Review structure and remuneration. Check that the current structure still supports risk, growth and tax objectives.
5. Keep source documents. Most business records need to be retained for at least five years, with longer periods applying in some situations.

A forecast should be updated when sales, staffing, financing or capital expenditure changes. That gives the owner time to adjust drawings, negotiate payment terms or arrange funding before a due date becomes urgent.

Official guidance: ATO — Supporting your small business.

A 13-week cash flow forecast maps expected receipts and payments week by week. It is especially useful when cash is tight, growth is absorbing working capital or the business is preparing for funding.

Start with cash, not accounting profit

• Opening bank balance and available facilities
• Customer receipts based on realistic payment timing
• Payroll, super, tax and supplier payments
• Rent, loan payments, capital purchases and owner drawings
• Closing cash and minimum headroom for each week

Make it a decision tool

Compare actual results with the forecast every week. Update collection dates, known commitments and assumptions. Then model practical actions: improving collection time, changing purchase timing, reducing discretionary costs or arranging a facility before it is needed.

The value is in the conversation it creates. A forecast should make the next decision clearer, not simply produce another spreadsheet.

Illustrative scenario — this example is designed to explain an advisory approach and is not presented as a client result.

A growing professional services firm is winning more work, but cash is becoming tighter and profit is not rising with revenue.

What the review examines

The management accounts are reorganised by service line and client type. The review compares utilisation, recovery rates, write-offs, work in progress, debtor days and delivery costs. This reveals where revenue growth is being offset by scope creep, slow billing and under-recovered senior time.

What the business can change

• Introduce clearer engagement scope and change controls.
• Set price floors using delivery cost and target margin.
• Move billing milestones closer to when work is performed.
• Use a weekly WIP and receivables meeting with named actions.
• Track a small set of leading indicators in a monthly dashboard.

A three-scenario forecast then shows how pricing, utilisation and collection timing affect cash and profitability. The owner can choose actions with a clear view of the trade-offs.