EOFY Equipment Finance: The Smart Business Owner's Playbook

Your accountant's going to call soon. They always do in May. "Are you planning any equipment purchases before June 30?" It's the annual ritual. But the real question isn't whether to buy. It's whether buying before EOFY actually makes you better off, and which finance structure gets you there.

What the $20,000 instant asset write-off actually covers

The instant asset write-off for 2025-26 lets eligible small businesses (turnover under $10 million) immediately deduct the full cost of any asset costing less than $20,000. Per asset, not in total. So you can write off a $18,000 trailer, a $5,000 laptop, and a $12,000 compressor in the same year, each one claimed in full.

But here's what catches people out: the $20,000 threshold is the ceiling, not the floor. That $85,000 excavator or $65,000 ute doesn't qualify for the instant write-off. Assets above $20,000 go into the small business depreciation pool, where they're deducted at 15% in the first year and 30% each year after that. Still valuable, but not the same as wiping the full cost in one hit.

The threshold drops to $1,000 from 1 July 2026 unless Parliament extends it. So if you've got sub-$20,000 purchases you've been putting off, the window is closing.

One more thing people miss: the asset must be installed and ready for use by 30 June, not just ordered or paid for. If your new welder arrives on 28 June but sits in the box until July, you can't claim it this financial year.

Above $20,000: the finance structure matters more than the write-off

For most equipment purchases worth making, you're above the $20,000 line. That's where the choice between a chattel mortgage, finance lease, and rental becomes the real EOFY decision.

Chattel mortgage

You own the asset from day one. The lender holds a mortgage over it as security, but it's yours on your balance sheet. If you're GST-registered, you claim the full GST credit on the purchase price upfront. On an $85,000 excavator, that's roughly $7,700 back in your next BAS.

You also claim depreciation (15% first year in the simplified pool) and deduct the interest on the loan. For businesses with strong cash flow that plan to keep the asset long-term, this is usually the most tax-efficient path.

Typical rates (2026): 6.5% to 8.5% p.a. for new equipment with established businesses. Used equipment runs higher, typically 7.5% to 10%.

Finance lease

The lender buys the asset and leases it to you. You get full use but don't own it until the end of the term, when you can purchase it at the residual value, refinance, or hand it back.

The advantage: lower monthly repayments. Because a residual sits at the end of the lease, you're not paying down the full amount each month. On an $85,000 asset over five years at 8% with a 30% residual, your monthly repayments drop from roughly $1,725 (chattel mortgage, no residual) to around $1,350.

The trade-off: no upfront GST credit, and you don't claim depreciation (the lender does). Your lease payments are tax-deductible, but the first-year tax benefit is typically smaller than a chattel mortgage.

Best for: businesses that upgrade equipment every 3 to 5 years, or those that need to keep monthly costs down.

Rental or operating lease

You pay a fixed monthly amount for use of the asset. Payments are fully tax-deductible as an operating expense. The asset stays off your balance sheet entirely, which can matter if you're managing debt ratios or applying for other finance.

Best for: short-term needs, technology that dates quickly, or businesses that don't want ownership risk.

The $85,000 worked example

The numbers shift depending on your business structure, marginal tax rate, and GST status. A sole trader on a 37% marginal rate gets a bigger tax saving from the same deductions than a company on 25%. That's why the accountant conversation matters.

When NOT to buy before June 30

The EOFY rush creates real traps. Here are the signs you should wait:

You're buying something you don't actually need yet. A $15,000 tax deduction doesn't justify an $85,000 purchase you won't use for six months. The deduction saves you money on tax. It doesn't make the asset free.

Your cash flow can't support the repayments. Taking on a new loan in June when your quietest quarter starts in July is a recipe for stress. Model the repayments against your actual revenue forecast, not your best month.

Three questions to ask your accountant before June 30

1. "Based on my projected taxable income, how much will this deduction actually save me?" A write-off only saves you tax if you have taxable income to offset. If your business is running at a loss, the deduction carries forward but doesn't help your cash flow this year.

2. "Chattel mortgage or lease - which structure gives me the better outcome for my business type?" The answer depends on your entity structure (sole trader, partnership, company, trust), your GST registration, and how long you plan to keep the asset. Don't let the finance company choose for you.

3. "Is there anything else I should bring forward or defer to optimise this financial year?" Sometimes the bigger win is prepaying insurance, making super contributions, or deferring an invoice. Your accountant sees the full picture. The equipment purchase is one piece.

What to do next

Get three quotes on the equipment before you talk finance. Know the purchase price, delivery timeline, and whether you're buying new or used. Then talk to your accountant about which structure suits your tax position.

Once you've got a structure in mind, compare finance offers. Don't just take the dealer's rate. The difference between a broker comparison and a single-lender quote can be $5,000 to $10,000 over the life of the loan.

If you're weighing up equipment finance before EOFY, Emu Money's finance specialists can compare options across 50+ lenders and help you match the right structure to your business. Compare equipment finance options.