Can you claim the instant asset write-off on financed equipment?

One of the most common questions we get from business owners is whether they can still claim the instant asset write-off when the equipment is financed. The short answer is yes, in most cases. How you pay for an asset does not decide whether it qualifies. The asset's cost and how you use it do.

This guide explains how the write-off works, the current threshold, and where finance fits in. Tax rules change often and your situation is your own, so treat this as general information and confirm the detail with your accountant before you lodge.

What the instant asset write-off is

The instant asset write-off lets an eligible small business claim an immediate tax deduction for the cost of an asset in the year it is first used or installed ready for use, rather than depreciating it slowly over years. It applies on a per-asset basis, so you can write off more than one asset in the same year, each under the threshold.

For the 2024 to 25 and 2025 to 26 income years, the threshold is $20,000 (excluding GST) per asset, for small businesses with an aggregated turnover under $10 million using the simplified depreciation rules. Assets that cost $20,000 or more do not miss out entirely. They go into the small business general pool and are depreciated at 15 percent in the first year and 30 percent each year after.

Important timing note: the $20,000 threshold is legislated only to 30 June 2026. After that it is set to revert unless the government extends it again. This figure has moved several times in recent years, so always check the threshold for the exact income year you are claiming in, and confirm with your accountant.

Does financing the asset change anything?

This is the part people get wrong. Eligibility is based on the asset's cost and its business use, not on whether you paid cash or financed it. If you buy a $18,000 piece of equipment on a chattel mortgage, you can generally still claim the full write-off in that year, even though you have only made a couple of repayments.

That is one of the quiet advantages of asset finance at tax time. You keep your cash in the business, spread the cost over the term, and may still get the full deduction upfront. The deduction is based on the asset's cost, while your repayments continue over the next few years.

The structure you use matters for how the deduction works. With a chattel mortgage or commercial hire purchase, you own the asset and claim depreciation, which is where the write-off applies. With a lease, the financier owns the asset and you claim the rental payments instead, so the write-off is treated differently. If the deduction is your goal, mention it to your broker and accountant early.

What needs to be true to claim it

• Your business is a small business with aggregated turnover under $10 million, using simplified depreciation.
• The asset costs less than the threshold for that year (currently $20,000 ex GST, per asset).
• The asset is first used, or installed ready for use, for a taxable purpose within the income year.
• You use the asset to produce business income. The deduction is reduced for any private use.

New and second-hand assets can both qualify, with some exclusions. The car cost limit also caps the amount you can write off or depreciate on a passenger vehicle, so a high-value car is treated differently to a work ute or a machine.

A simple worked example

Say you run a landscaping business and buy a $16,500 mini excavator (including GST) on a chattel mortgage in May. The GST-exclusive cost is $15,000, which is under the threshold. You put it to work straight away. In most cases you could claim the $15,000 as an immediate deduction that financial year, claim the GST credit through your BAS, and keep paying the finance off over the next few years. Your accountant confirms the numbers against your return.

If that same machine cost $25,000 ex GST, it would sit above the threshold. You would not lose the deduction, but you would claim it through the general pool over time rather than all at once.

Timing it around the end of the financial year

Because the deduction lands in the year the asset is first used or installed ready for use, timing matters. A machine that is financed and working before 30 June is treated very differently to one that arrives in July. Asset finance can help here, because a clean, asset-backed deal on a standard machine can often be approved and settled quickly, sometimes within a day or two of signing. If you are buying close to year end, talk to a broker early so the timing does not slip.

This is general information only and not financial, credit, or tax advice. Tax thresholds and rules change, including the $20,000 write-off which is legislated only to 30 June 2026. Consider your own circumstances and speak to your accountant or registered tax agent.

This article is general information only and not financial, credit, or tax advice. Ventas Asset Lending is a finance broker, not a lender. Approvals are subject to lender assessment. Consider your own circumstances and speak to a qualified professional, including your accountant for any tax questions.