There is a little over a month left in the 2025-26 financial year, which is when the phones start ringing about equipment purchases.
The instant asset write-off is genuinely useful and also the most misunderstood tax measure among small business owners. The misunderstanding comes down to one phrase — “first used or installed ready for use” — and the disappointment in July comes from people who bought in good time but did not have the asset working in time.
Eligibility depends on your circumstances, so confirm the detail with your accountant before you buy.
What is available for the 2025-26 year
The current settings are:
- A $20,000 threshold, applied to the asset.
- The asset must be first used or installed ready for use by 30 June 2026.
- Available to businesses with aggregated turnover under $10 million.
- New and second-hand assets both qualify.
- Assets costing $20,000 or more go into the small business pool rather than being written off immediately.
Two details there matter more than they look.
First, the threshold applies to each asset, not to your total spend for the year. Buying several eligible items each under $20,000 does not mean adding them together.
Second, only the business-use portion is deductible, but the whole cost of the asset must be under the threshold. Those two rules pull in opposite directions and people mix them up. An asset costing $24,000 used 70% for business does not become a $16,800 asset that squeaks under the line — it costs $24,000, it is over the threshold, and it goes to the pool. An $18,000 asset used 70% for business is eligible, and what you claim is 70% of $18,000.
What happens after 30 June 2026 is a matter for government announcement rather than something to plan around.
The words that catch people out
“First used or installed ready for use” is not the same as ordered, and not the same as paid for.
A deposit paid in June for a machine that arrives in August does not qualify this year. Neither does a machine that lands on your dock on 25 June and sits in its crate until the electrician gets to it in July. If it needs commissioning, a concrete pad, three-phase power or a safety sign-off before it can work, it is not installed ready for use until that is done.
The test is practical: on 30 June, could the asset be used for its intended purpose? Being paid for and being yours are beside the point if the answer is no.
So the real deadline for anything with a lead time is not 30 June. It is whenever the supplier needs the order confirmed to deliver, install and commission in time — and for imported equipment, that date may already have passed.
Where finance fits
Financing the asset does not stop you claiming
This is the most common question. How you pay for an eligible asset does not change whether you can claim it. A business buying a $15,000 machine on a chattel mortgage is generally in the same position as one that paid cash, provided the asset qualifies and is installed ready for use in time.
That matters because the alternative, draining working capital in June to chase a deduction, is often the worse decision. You keep the cash in the business, repay the finance over the asset’s working life, and the deduction still falls this year.
Finance structures are treated differently for tax, though. A chattel mortgage, a finance lease and an operating lease do not produce the same outcome, and only some involve you owning the asset. Check the structure with your accountant before you sign.
Timing is the whole game
If finance is part of the plan, start now rather than in the third week of June. Approvals need documents, settlement needs signed contracts, and suppliers will not release equipment until they have been paid. Every step takes days, and June is the busiest month of the year for financiers and suppliers alike.
A week’s delay in an application easily becomes three weeks on the dock, which is how an asset everyone meant to claim this year ends up claimed next year.
A deduction is not a rebate
Worth stating plainly, because it drives a lot of poor June spending. Writing off a $15,000 asset reduces your taxable income by $15,000. It does not put $15,000 back in your pocket. The cash benefit is that deduction multiplied by the tax rate applying to your entity, and your accountant can tell you that rate.
So the write-off is a good reason to bring forward a purchase you were already going to make, and a poor reason to buy something you do not need. It improves the timing of a benefit; it does not make an unnecessary asset free.
Above the threshold: the pool
Assets costing $20,000 or more are not lost. They go into the small business pool and are depreciated there. A slower benefit, not no benefit.
Worth remembering when you are tempted to specify a cheaper machine purely to fit under the threshold. Buying the wrong equipment for a timing advantage is a decision you live with for years.
The run to 30 June
A short checklist:
- List the assets you actually need in the next twelve months, not the ones you could justify.
- Check each against the threshold on its full cost, before any business-use apportionment.
- Ask each supplier for a realistic delivery, installation and commissioning date, in writing.
- Confirm eligibility and the tax treatment of your preferred finance structure with your accountant.
- Get finance underway now, so settlement is not what holds up installation.
If equipment finance is part of your plan before year end, now is the time to have it moving. Flexible Capital arranges asset and equipment finance for Australian businesses and can tell you quickly whether a deal can realistically settle in time. Give us a call while there is still runway.
