What is the current instant asset write-off threshold in Australia?

The current instant asset write-off threshold for the 2023-24 financial year is $20,000 (ex GST) per eligible asset. This applies to businesses with an aggregated turnover of less than $50 million, according to the Australian Taxation Office (ATO). The asset must be first used or installed ready for use by 30 June 2024.

Can I claim GST on equipment financed with a chattel mortgage?

Yes, generally with a chattel mortgage, your business can claim the full GST component in your next Business Activity Statement (BAS) if you are registered for GST. This is because, for tax purposes, you are considered the owner of the asset from the outset, even though it is secured by the lender.

What is the difference between a finance lease and a chattel mortgage for tax purposes?

A finance lease typically means the financier retains ownership of the asset, and your business makes lease payments, which are generally tax-deductible. With a chattel mortgage, your business owns the asset from the start, and you can claim depreciation (or instant asset write-off) and interest on the loan, as confirmed by the ATO.

How does instant asset write-off work for financed equipment?

If you’re buying equipment around EOFY, the instant asset write-off can be useful — but many business owners get tripped up when finance is involved. The key point is that the tax treatment and the finance structure are related, but they’re not the same thing, so getting both right can make a real d

Skill level: General guidance
Time: Varies
Trade: Business & Equipment Finance
Updated: 4 November 2026

How does the instant asset write-off work for financed equipment?

What are the key considerations for instant asset write-off with financed equipment?

The instant asset write-off is a tax measure administered by the ATO that may allow eligible businesses to immediately deduct the business-use portion of the cost of an eligible asset, rather than depreciating it over time. The rules, thresholds and eligibility can change from year to year, so it’s important to check the current ATO guidance.

Financing equipment does not automatically stop you from potentially claiming the write-off. In many cases, what matters is whether the asset is eligible, when it is first used or installed ready for use, how it is used in the business, and whether your business meets the ATO’s current criteria.

The type of finance can affect how the arrangement is treated for tax and accounting purposes. For example, a chattel mortgage, finance lease, hire purchase or rental can work differently in relation to ownership, GST timing, interest deductibility and who may be entitled to claim depreciation or other deductions.

Cash flow and tax outcomes are not always aligned. An instant deduction may reduce taxable income, but you still need to meet loan repayments, deposits, balloon payments and running costs. That’s why many businesses look at both the tax position and the repayment structure together.

Lenders assess the finance application separately from the tax benefit. Approval is generally based on factors like trading history, serviceability, ABN/GST status, bank conduct, asset type and overall business strength, subject to lender criteria and responsible lending obligations under the National Consumer Credit Protection framework where applicable.

What A Specialist Would Review For Your Situation

Whether the asset and your business are likely to meet the ATO’s current eligibility rules, including timing, business-use percentage and when the asset is installed ready for use.

Which finance structure may be more suitable for your situation — such as chattel mortgage, hire purchase, lease or rental — based on ownership, GST treatment, repayment flexibility and how long you expect to keep the asset.

How the repayments fit your cash flow, especially if your business is seasonal, project-based or contractor-driven, and whether a balloon payment or tailored term may help or create risk later.

What documents will strengthen the finance application, such as BAS, bank statements, tax returns, management figures or low-doc evidence if you’re self-employed.

Whether there are any broader implications for your accountant, bookkeeper or tax agent to consider, including depreciation rules, GST credits and record-keeping expectations set by the ATO and ASIC/Moneysmart guidance.

Common Costly Mistakes

Assuming “financed” means you can’t claim anything, or assuming every financed asset automatically qualifies.

Focusing only on the tax deduction and overlooking total finance cost, repayment pressure or a large balloon at the end.

Buying before confirming when the asset must be installed and ready for use under current ATO rules.

Choosing a finance product based on the monthly repayment alone without understanding ownership, GST and end-of-term obligations.

When To Get Professional Help

DIY usually stops making sense when the equipment is expensive, the structure is not straightforward, or your business income is uneven. It’s also worth getting help if you’re a sole trader, contractor or self-employed borrower using low-doc options, because the tax and lending sides need to line up properly.

Talk To A Specialist

If you’re weighing up an equipment purchase around EOFY, a finance specialist can help you understand how the funding options may work alongside your accountant’s tax advice. If you’d like to explore your options, you can get matched with a specialist here: /finance/enquire?service=finance

Frequently Asked Questions

Can I use the instant asset write-off if I finance the equipment?

Potentially, yes — financing an asset does not automatically rule it out. In general, eligibility depends on the ATO’s current rules, the type of asset, your business eligibility, business-use percentage, and whether the asset is first used or installed ready for use within the required timeframe.

Does it matter whether I use a chattel mortgage, lease or hire purchase?

Yes, it can matter. Different structures can affect who is treated as holding the asset, how GST is handled, and what deductions may be available, so the right option depends on your business circumstances and should be confirmed with your accountant and finance specialist.

Do I claim the full asset cost if I only use it partly for business?

Usually, only the business-use portion is relevant for tax purposes. If there is any private use, accurate records become important so your accountant or registered tax professional can work out the correct treatment under ATO rules.

What if I buy the equipment before EOFY but it arrives later?

Timing can be critical. For many ATO asset measures, it is not just the order date that matters — the asset generally needs to be first used or installed ready for use within the relevant period, so late delivery or delays can affect the outcome.

Will the tax deduction help me get approved for finance?

Not directly. Lenders generally assess repayment capacity based on income, existing commitments, bank conduct and the strength of the business, rather than relying on a future tax benefit, and approval is always subject to lender policy and verification requirements.

Important — General Information Only

This information is general in nature only and is not personal business or equipment finance advice, tax advice, legal advice or credit advice. It does not take into account your objectives, financial situation or needs, and you should consider your own circumstances and seek advice from an appropriately licensed or registered professional — such as your accountant, registered tax agent or finance specialist — before acting. Tax treatment and eligibility for measures such as the instant asset write-off depend on current ATO rules, while lending and disclosure obligations may also be affected by ASIC guidance, Moneysmart information and the National Consumer Credit Protection framework where applicable.

Frequently asked questions

Can I use the instant asset write-off if I finance the equipment?: Potentially, yes — financing an asset does not automatically rule it out. In general, eligibility depends on the ATO’s current rules, the type of asset, your business eligibility, business-use percentage, and whether the asset is first used or installed ready for use within the required timeframe.
Does it matter whether I use a chattel mortgage, lease or hire purchase?: Yes, it can matter. Different structures can affect who is treated as holding the asset, how GST is handled, and what deductions may be available, so the right option depends on your business circumstances and should be confirmed with your accountant and finance specialist.
Do I claim the full asset cost if I only use it partly for business?: Usually, only the business-use portion is relevant for tax purposes. If there is any private use, accurate records become important so your accountant or registered tax professional can work out the correct treatment under ATO rules.
What if I buy the equipment before EOFY but it arrives later?: Timing can be critical. For many ATO asset measures, it is not just the order date that matters — the asset generally needs to be first used or installed ready for use within the relevant period, so late delivery or delays can affect the outcome.
Will the tax deduction help me get approved for finance?: Not directly. Lenders generally assess repayment capacity based on income, existing commitments, bank conduct and the strength of the business, rather than relying on a future tax benefit, and approval is always subject to lender policy and verification requirements.
What is the current instant asset write-off threshold in Australia?: The current instant asset write-off threshold for the 2023-24 financial year is $20,000 (ex GST) per eligible asset. This applies to businesses with an aggregated turnover of less than $50 million, according to the Australian Taxation Office (ATO). The asset must be first used or installed ready for use by 30 June 2024.
Can I claim GST on equipment financed with a chattel mortgage?: Yes, generally with a chattel mortgage, your business can claim the full GST component in your next Business Activity Statement (BAS) if you are registered for GST. This is because, for tax purposes, you are considered the owner of the asset from the outset, even though it is secured by the lender.
What is the difference between a finance lease and a chattel mortgage for tax purposes?: A finance lease typically means the financier retains ownership of the asset, and your business makes lease payments, which are generally tax-deductible. With a chattel mortgage, your business owns the asset from the start, and you can claim depreciation (or instant asset write-off) and interest on the loan, as confirmed by the ATO.

Written by Capital, the Business & Equipment Finance specialist at Aus.Tools.