Instant Asset Write-Off for Solar: Can Your Business Claim It in 2026?

Every financial year, thousands of Australian business owners rush to buy equipment before 30 June to take advantage of the instant asset write-off. Utes, laptops, espresso machines. But one of the most overlooked eligible assets is sitting right above their heads: solar panels.

A solar system is a capital asset just like any other piece of business equipment. If it meets the rules, you can write off the full cost in the year you install it, rather than depreciating it slowly over 20 years. For a business paying a 25% company tax rate, that means an immediate tax saving of up to $5,000 on a qualifying system, on top of the electricity bill savings you will enjoy for decades.

Here is exactly how it works, who qualifies, and what to do if your system is too expensive for the instant write-off.

The instant asset write-off allows eligible businesses to immediately deduct the cost of new or second-hand assets in the financial year they are first used or installed. Rather than claiming small amounts over many years through depreciation, you claim the full amount upfront.

For the 2025-26 financial year, the rules are:

The threshold is per individual asset, not per total spend. This is important for solar because it opens up a strategy: if the panels and the inverter are invoiced as separate assets, each one can qualify independently. More on this below.

Yes. Solar panels, inverters, and battery storage systems are all depreciable assets in the eyes of the ATO. They are classified as plant and equipment, which means they are eligible for the instant asset write-off provided they meet the cost and turnover thresholds.

The cost you use for the write-off is the amount your business actually pays after the STC rebate discount is applied at point of sale. The STC discount reduces the purchase price, so it also reduces the depreciable amount.

For example, a 6.6kW system with a retail price of $8,000 that receives a $1,900 STC discount has a depreciable cost of $6,100. That $6,100 is the figure you claim under the instant asset write-off, not the original $8,000.

This is good news. It means most small business solar installations, from a 5kW system on a shop roof to a 13kW system on a warehouse, will come in under the $20,000 threshold after the STC discount is factored in.

The sweet spot is systems up to about 20kW. Beyond that size, the cost after STCs typically pushes past the $20,000 threshold. But do not worry if your system is larger. You have other depreciation options that still deliver meaningful tax benefits, covered further down this page.

Here is where it gets interesting. The $20,000 threshold applies per asset, and the ATO treats distinct components as separate assets when they are separately identifiable and functional.

If you install solar panels and a battery storage system at the same time, ask your installer to invoice them as separate line items with distinct asset descriptions. The panels and inverter form one asset. The battery forms another. If each comes in under $20,000, you can claim the instant write-off on both.

For example: a 15kW solar system at $12,000 after STCs, plus a 10kWh battery at $11,000. Bundled as a single asset, the $23,000 total exceeds the threshold. Split into two separate assets on the invoice, both qualify individually.

This is not a loophole. The ATO explicitly allows separate assets to be treated independently. The key is that each asset must be genuinely distinct (not artificially split) and must be described as separate items on your invoice and in your records. Your accountant can confirm the correct treatment for your situation.

Larger commercial solar systems (30kW, 50kW, 100kW and above) will exceed the instant write-off threshold. You still get tax benefits through depreciation, just spread over a longer period.

There are two main depreciation paths:

Your accountant will help you choose the best method. In most cases, the simplified depreciation pool gives faster deductions for small businesses. Larger businesses that exceed the $10M turnover threshold will use the general rules. For a deeper look at the ATO rates, see our solar panel depreciation guide.

To claim the instant asset write-off in the 2025-26 financial year, your solar system must be installed and ready for use by 30 June 2026. That means connected, commissioned, and generating power, not just ordered or paid for.

This is where businesses get caught out. A commercial solar installation typically takes 4 to 8 weeks from signing to commissioning. If you want to claim the deduction this financial year, you realistically need to be getting quotes now and signing a contract by April or May at the latest.

Installers get very busy in the April to June period as businesses rush to beat the EOFY deadline. The earlier you start the process, the better your chances of getting your preferred installer and having the system commissioned in time. Our guide to vetting solar installers can help you find a reliable one.

One of the things that makes solar such a strong business purchase is that you benefit from two separate government mechanisms at the same time.

First, the STC rebate reduces the purchase price at the point of sale. For a 10kW system in 2026, that is roughly $2,800 off the sticker price. You do not have to do anything special to claim this; your installer handles the STC paperwork and applies the discount to your invoice.

Second, the instant asset write-off (or depreciation) lets you claim the remaining cost as a tax deduction. So you are reducing the cost twice: once at purchase, and again at tax time.

If you run a business from home, you can still claim the instant asset write-off for solar, but only for the portion used for business purposes. The ATO expects you to make a reasonable apportionment.

For a sole trader who works from a dedicated home office that takes up 20% of the house, you could claim 20% of the solar system cost as a business deduction. On a $6,000 system, that is a $1,200 deduction.

The method for apportioning must be reasonable and documented. Common approaches include the floor area of your dedicated work space as a percentage of total floor area, or the hours the asset is used for business versus personal purposes. Keep records of how you calculated the split, as the ATO can ask you to justify it.

From conversations with accountants and business owners, these are the mistakes that come up most often when claiming the instant asset write-off for solar.

When you are getting solar quotes, ask your installer to itemise the components on the invoice. This matters for several reasons.

First, it lets you and your accountant identify the correct depreciable amount for each asset. Second, if you are installing a battery alongside panels, separate line items let you treat them as separate assets for the instant write-off. Third, it creates a clean paper trail if the ATO ever queries the deduction.

A good commercial solar installer will be familiar with this. Ask for the invoice to show: solar panels (model, quantity, and cost), inverter (model and cost), battery if applicable (model, capacity, and cost), mounting and installation labour, and the STC discount applied.

The instant asset write-off is the icing, not the cake. The real financial case for commercial solar rests on electricity savings.

A typical small business with a 10kW system will save $2,000 to $3,500 per year on electricity, depending on how much they use during business hours. A 30kW system on a warehouse can save $6,000 to $10,000 per year. These savings continue for 25 years or more, long after the tax benefit has been claimed.

When you combine the STC upfront discount, the instant asset write-off (or accelerated depreciation), and the ongoing electricity savings, the effective payback period for a business solar system drops to as low as 2 to 3 years. After that, you are generating free electricity and improving your bottom line every single quarter.

For a detailed pricing breakdown by system size, see our commercial solar cost guide. Farmers and rural businesses should also check our farm solar guide, which covers ground-mount systems, irrigation pumps, and the specific economics of agricultural solar.

If your business also qualifies for state-level commercial solar rebates, the numbers look even better. Several states offer additional incentives for business solar installations that stack on top of the federal STC scheme.