With 30 June fast approaching, many business owners are turning their attention to equipment purchases, and for good reason. The instant asset write-off is currently available for eligible small businesses, allowing an immediate deduction for assets costing less than $20,000 each that are first used or installed ready for use before the end of the financial year.
But EOFY urgency can also lead to rushed decisions. Buying equipment you do not genuinely need, or making a purchase without thinking through how it will be financed, can cost your business more than it saves.
Before you commit to an equipment purchase this EOFY, here are some questions worth asking.
Does my business actually need this equipment right now?
A tax deduction reduces your taxable income, but it does not eliminate the cost of the asset. If you are spending $15,000 on equipment your business is not ready to use or does not genuinely need, you are still spending $15,000.
The most effective EOFY purchases are ones that would have made sense at any time of year - equipment that improves productivity, replaces something worn out, or helps the business take on more work. If the only reason you are buying is the tax deadline, it is worth coming up with a better plan.
Does this purchase actually qualify for the instant asset write-off?
The instant asset write-off is available to small businesses with annual turnover under $10 million, for eligible assets costing less than $20,000 each. The threshold applies per asset, so multiple qualifying purchases can each be claimed individually. However, if a single asset costs $20,000 or more, it cannot be written off immediately and instead goes into the small business depreciation pool.
It is also worth noting that the current $20,000 threshold is a temporary measure, confirmed until 30 June 2026. Unless extended by Parliament, it is scheduled to revert to $1,000 from 1 July 2026. Checking eligibility with your accountant before purchasing is a good decision.
Will the asset be installed and ready for use before 30 June?
This is one of the most commonly overlooked requirements. To qualify for the instant asset write-off in the current financial year, the asset must be first used or installed ready for use by 30 June 2026. Ordering or paying for equipment before the deadline is not enough if it has not been commissioned and made operational by that date.
For straightforward purchases like tools, computers or office equipment, this is usually manageable. But for larger or more complex items - machinery that requires installation, vehicles awaiting delivery, or equipment that needs site preparation - lead times can push past the deadline if you leave it too late.
If you are considering a purchase that involves any kind of setup or delivery lead time, now is the time to act rather than leaving it to end June.
Should I pay cash or use equipment finance?
Even if you have the cash available, paying outright for equipment is not always the best decision for your business. Using working capital to fund a large asset purchase can leave the business exposed if an unexpected expense or cash flow gap comes up shortly after.
Equipment finance allows you to acquire the asset now while spreading the cost over time, preserving your working capital for day-to-day operations. Depending on the finance structure you use - chattel mortgage, finance lease or hire purchase - there may also be different tax and GST implications, which is another reason to talk to your accountant before deciding.
The right approach will depend on your cash position, the size of the purchase and your broader tax planning for the year. It is not always one or the other, and the most effective strategy often involves coordinating the purchase timing, the finance structure and your tax position together.
Talk to a Finance Broker
A finance broker can help you compare your options across a range of equipment finance products and lenders, and help you meet the 30 June deadline. Book a free consultation with Dhaniro Mortgage Solutions and we will walk you through your options and the best loan structure for your situation. Book a call or phone us on 0451 473 343.
This article is general information only and is not personal tax or financial advice. Tax positions vary by individual circumstances. Speak to a licensed accountant or financial adviser before making investment decisions.