Usually, yes. If your business buys equipment with a chattel mortgage or hire purchase, it is treated as the owner for tax purposes, so you can generally claim the instant asset write-off on the asset's cost even though the loan isn't paid off. For businesses with an aggregated turnover under $10 million, the limit is $20,000 per asset, and from 1 July 2026 it is permanent. Equipment on a finance lease or rental works differently: the financier owns it, so you claim the lease payments instead.
What the instant asset write-off is
The instant asset write-off lets an eligible business deduct the business portion of an asset's cost in the year the asset is first used or installed ready for use, instead of depreciating it over several years. It applies to new and second-hand assets, and to as many assets as you like, provided each one costs less than the limit.
According to the ATO's instant asset write-off page (last updated 28 August 2026), the limit for businesses with an aggregated turnover under $10 million that use the simplified depreciation rules is:
| Asset first used or installed ready for use | Limit per asset |
|---|---|
| 1 July 2023 to 30 June 2026 | $20,000 (extended in stages) |
| On or after 1 July 2026 | $20,000 (permanent) |
Before 1 July 2026 the $20,000 limit was extended in stages, sometimes at short notice. The Treasury Laws Amendment (Tax Reform No. 2) Act 2026, which received Royal Assent on 26 August 2026, makes it permanent from 1 July 2026 for businesses with an aggregated turnover under $10 million. Tax law can still change, so check the current figure before you rely on it.
Does financing change whether you can claim?
It depends on who owns the asset for tax purposes, which is decided by the finance structure, not by whether the loan is paid off:
| Structure | Who owns it for tax | What you can generally claim |
|---|---|---|
| Chattel mortgage | Your business | Instant asset write-off or depreciation on the cost, plus the loan interest |
| Hire purchase | Your business (treated as a purchase) | Instant asset write-off or depreciation on the cost, plus the interest component |
| Finance lease | The financier | The lease payments - no instant asset write-off |
| Operating lease or rental | The financier | The rental payments - no instant asset write-off |
That is one reason a chattel mortgage is the most common way small businesses finance equipment they want to write off. Our guide to chattel mortgage vs lease covers the other differences.
The limit is per asset, and usually excludes GST
Each asset is tested on its own cost. If your business is registered for GST and can claim the full GST credit, the cost is measured excluding GST. For example, a trailer priced at $21,450 including GST costs $19,500 excluding GST, which is under the $20,000 limit.
What counts is the asset's total cost, not the business-use portion. The ATO's own example: a $40,000 ute used 40% for business can't be written off, even though the business portion is only $16,000.
What happens above the limit
If an asset costs the same as or more than the limit, small businesses using the simplified depreciation rules add it to the small business pool. According to the ATO, the pool depreciates at 15% in the first year and 30% in each year after that. With a chattel mortgage, the interest on the loan is still generally deductible as a separate expense.
Passenger vehicles have an extra rule. The car limit caps the cost you can depreciate on vehicles designed to carry fewer than 9 passengers and less than one tonne. Many dual-cab utes carry more than a tonne, so they may not be caught; check the payload on the compliance plate.
Timing matters more than the finance approval
The deduction falls in the income year the asset is first used or installed ready for use. Ordering it, signing the contract or getting finance approved in June isn't enough on its own. If you are aiming for a claim before 30 June, build in time for:
- Dealer stock and delivery, which can take weeks for trucks and machinery
- Fit-out, registration or installation
- Finance approval and settlement, especially for used or private-sale assets
Balloon payments and repayments don't change the claim
The write-off or depreciation is based on the asset's cost. How you repay the loan - term, repayment frequency, or a balloon at the end - does not change it. That means you can structure repayments around cash flow without affecting the tax treatment of the asset itself.
The takeaway
Financing equipment doesn't stop you claiming the instant asset write-off. What matters is the structure: chattel mortgage and hire purchase generally allow it, while leases and rentals don't. Each asset must cost less than the limit - $20,000 per asset for businesses under $10 million turnover, permanent from 1 July 2026 - and be ready for use in the year you claim. Confirm your eligibility with your accountant before you buy, then compare equipment finance that suits both the asset and your cash flow.
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Finance is subject to lender approval, lending criteria, terms, conditions, fees and charges. The information in this article is general and does not take into account your personal or business needs. loan-o is not a tax adviser - speak with your accountant or a registered tax agent about your situation.
Last reviewed: 8 October 2026. This article was prepared using information from the Australian Taxation Office's instant asset write-off guidance (last updated 28 August 2026), the Treasury Laws Amendment (Tax Reform No. 2) Act 2026 (Royal Assent 26 August 2026) and the Treasurer's second reading speech (25 June 2026). Limits and eligibility change over time. This content provides general information only. It should not be treated as personal financial, tax, legal or credit advice.
Frequently asked questions.
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Generally, yes, if you bought it with a chattel mortgage or hire purchase. Under both structures your business is treated as the owner for tax purposes, so the write-off applies to the asset's cost even though the loan has not been paid off. It does not apply to equipment under a finance lease, operating lease or rental, because the financier owns it; the lease payments are generally deductible instead.
For businesses with an aggregated turnover under $10 million that use the simplified depreciation rules, the limit is $20,000 per asset. The Treasury Laws Amendment (Tax Reform No. 2) Act 2026, which received Royal Assent on 26 August 2026, makes the $20,000 limit permanent from 1 July 2026. Tax law can change, so confirm the current figure with the ATO or your accountant before you buy.
Per asset. You can write off multiple assets in the same year as long as each one individually costs less than the limit. If you are registered for GST and can claim the full GST credit, the cost is measured excluding GST.
It cannot be written off immediately. Small businesses using the simplified depreciation rules add it to the small business pool, which depreciates at 15% in the first year and 30% in each year after that, according to the ATO. With a chattel mortgage, the interest is still generally deductible as a separate expense.
No. The write-off or depreciation is based on the asset's cost, not on how the repayments are structured. A balloon lowers your regular repayments but leaves a lump sum at the end of the term; it does not change the tax treatment of the asset itself.
The deduction applies in the income year the asset is first used or installed ready for use - not when you order it or when finance is approved. If you are aiming for a claim before 30 June, allow time for dealer delivery, fit-out and finance settlement.
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