The $20,000 instant asset write-off: who finances the purchase, and when it makes sense

For years the instant asset write-off came with an annual cliffhanger: would the threshold be extended, and would the legislation pass before 30 June? That uncertainty drove a rush of equipment purchases every June, some sensible and some not. The ATO has now confirmed that from 1 July 2026 the $20,000 instant asset write-off is permanent. That changes the planning — and gives owners room to buy when the business needs the asset rather than when the calendar says so.

This guide explains how the write-off works, which lenders finance eligible purchases, and how to think about the tax benefit without letting it drive a bad decision.

How does the instant asset write-off work?

According to the ATO:

• Small businesses with aggregated turnover under $10 million using the simplified depreciation rules can claim an immediate deduction.
• The deduction is for the business portion of the cost of an eligible asset.
• Each asset must cost less than $20,000. The threshold applies per asset, so several assets can each qualify.
• The deduction is claimed in the income year the asset is first used or installed ready for use.
• Both new and second-hand assets can qualify.

Assets costing $20,000 or more are generally depreciated under the simplified rules instead. Your accountant will confirm the details for your business, including GST treatment and private-use portions.

What does the write-off actually save?

A deduction reduces taxable income; it doesn’t refund the purchase price. The cash benefit is the tax you don’t pay on that income this year, at your business’s tax rate — and only if the business has taxable profit to offset. You still pay for the asset in full, whether in cash or over the life of a loan.

That’s why the sensible order of questions is:

1. Does the business need this asset to earn money or save costs?
2. Can the business afford it — in cash or in repayments?
3. Then: how does the write-off improve the after-tax picture?

Which lenders finance eligible assets?

Lender type	Good for	Notes
Asset and equipment financiers	Vehicles, tools, machinery, technology	Asset is the security; often light documents for smaller amounts
Manufacturer or dealer finance	Buying at the point of sale	Compare with an independent quote
Major and regional banks	Established customers	Can bundle with other facilities
Online lenders	Small, quick purchases	Unsecured, higher cost, frequent repayments
Business credit cards and lines of credit	Very small items	Watch the cost if not cleared quickly

For assets under $20,000, asset financiers are often the simplest route. Many lend on ID, ABN, a supplier invoice and a credit check for common, resaleable items. See who lends for equipment and vehicles for a fuller comparison.

Thinking about a purchase and how to fund it? Ask a specialist — it doesn’t touch your credit file.

Does the finance structure affect the deduction?

The ATO’s write-off rules focus on the asset’s cost and when it’s first used or installed ready for use. How you fund it is a separate question. But some structures change who owns the asset — under a lease, for example, the financier owns it and you pay rent — and that changes the tax treatment. business.gov.au notes that whether you lease or buy, GST credits and tax deductions may be available for business use. Ask your accountant which structure suits you before you sign, not afterwards.

Should you still buy before 30 June?

With the threshold now permanent, there’s less reason for a June rush. The timing question becomes simpler:

• Buy when the business needs it. A permanent threshold means you won’t lose the concession by waiting.
• Mind the year. The deduction lands in the year the asset is first used or installed ready for use. An asset bought on 29 June but installed in July is claimed next year.
• Consider cash flow. If finance repayments start before the asset is earning, plan for the gap.

How do you compare finance offers for an eligible asset?

Ask each lender for the amount financed, the total repayable in dollars and the repayment schedule. For a $15,000 asset, an illustrative comparison might show:

	Offer A (asset finance)	Offer B (online loan)
Amount financed	$15,000	$15,000
Term	36 months	12 months
Repayment frequency	Monthly	Weekly
Total repayable	Quoted in dollars	Quoted in dollars
Security	The asset	Director guarantee

Illustrative only — not real offers. The comparison that matters is total cost in dollars and whether the repayment fits your cash flow. Put each lender’s figures into the repayment comfort calculator to see the weekly or monthly impact.

What checks apply to second-hand assets?

Second-hand assets qualify for the write-off, but they need more care when financing:

• PPSR search. The Personal Property Securities Register shows whether someone else holds a security interest over the asset. Buying an asset with existing finance on it can leave you exposed.
• Ownership. Confirm the seller owns what they’re selling.
• Condition and value. Lenders may want an inspection, especially for older or private-sale items.

What mistakes do owners make?

• Buying for the deduction. A $19,000 purchase that saves some tax still costs $19,000.
• Ignoring the installed-ready-for-use rule and missing the intended year.
• Splitting one asset into parts to get under the threshold — the ATO rules apply to the asset, and your accountant should advise on what counts.
• Choosing the wrong finance. Using a short, high-frequency loan for an asset that will earn over many years.
• Forgetting turnover. The concession is for businesses with aggregated turnover under $10 million.

Our guide on tax returns and borrowing explains why having your lodgements current also helps if you’re financing larger purchases.

An illustrative example

Purely illustrative: a mobile mechanic with a few years’ trading needs a diagnostic scanner, a hoist and a trailer, each costing under $20,000. Rather than a single unsecured loan, they finance the trailer and hoist through an asset financier on a 36-month chattel mortgage and buy the scanner from cash flow. The accountant confirms each asset’s eligibility and the business claims the write-off in the year each item is installed ready for use. Repayments are set monthly to match how the business gets paid.

How do you decide between cash and finance for a small asset?

For assets under the threshold, many businesses simply pay cash. That can be the right choice, but it isn’t automatic. Consider:

• What else the cash is needed for. If paying cash leaves the business short for wages or a BAS, finance may be the safer choice even if it costs more in total.
• How long the asset earns. An asset that earns for several years can reasonably be paid for over several years.
• The total cost of finance in dollars, compared with the value of keeping cash in the business.
• Your seasonal cycle. Buying with cash just before a quiet season can create a squeeze that finance would have avoided.

A short conversation with your accountant about the tax side and a lending specialist about the finance side usually settles it.

One last point: keep the paperwork for every asset you claim — the tax invoice, the finance contract, the date it was first used or installed ready for use, and the business-use percentage. The ATO’s record-keeping rules mean you’ll need it for years, and a lender assessing your next application may ask for it too.

Planning an equipment purchase?

Start with what the business needs, then match the finance to the asset’s working life. Send a 60-second enquiry with what you’re buying and roughly what it costs, and a lending specialist will tell you which lender type will fund it most sensibly. No credit check to ask, your details go to one well-chosen financier rather than many, and accurate answers about the purchase help us get the structure right the first time. Talk to your accountant about the write-off itself.