The clock is ticking for Australian small businesses looking to slash their tax bills for the 2025–26 financial year. The federal government’s $20,000 Instant Asset Write-Off threshold is officially scheduled to expire on 30 June 2026. From 1 July 2026, the threshold is set to revert to its default statutory level of just $1,000. This represents a massive tax cliff that could cost business owners thousands of dollars in foregone deductions if they fail to act immediately.
Understanding the $20,000 Threshold Rules
Under the current rules, small businesses with an aggregated annual turnover of less than $10 million can immediately deduct the full cost of eligible depreciating assets costing less than $20,000. Crucially, this limit applies on a per-asset basis, not as a cumulative cap. You can buy multiple eligible assets (e.g., three separate pieces of machinery costing $18,000 each) and write them all off in full, provided each individual asset is under the $20,000 threshold.
However, there is a strict catch: the asset must be “first used or installed ready for use” for a taxable purpose between 1 July 2025 and 30 June 2026. Merely signing a contract or paying a deposit before June 30 is not enough to claim the deduction this financial year; the physical asset must be on-site and operational.
How Equipment Finance Unlocks This Tax Benefit
Many small businesses make the mistake of draining their cash reserves in June to purchase equipment outright just to get a tax write-off. This can severely cripple your working capital heading into the new financial year. By utilising a structured Equipment Finance facility, such as a Chattel Mortgage, you can secure the asset, take ownership, install it ready for use, and claim the full tax deduction this EOFY—all while preserving your vital cash reserves.
📈 Case Study: Sydney Medical Practice Slashes Tax Bill
The Client: Dr. Evelyn Vance, owner of a boutique dental and cosmetic clinic in North Sydney.
The Challenge: Dr. Vance needed to purchase two new state-of-the-art sterilisation autoclaves and a high-resolution intraoral scanner to meet growing patient demand. The total cost of the three items was $54,000 (comprising three separate invoices: $17,500, $18,000, and $18,500). Draining $54,000 from her cash reserves in June would have left her clinic with tight cash flow for July payroll and rent.
The Solution: Commercial Finance Australia structured a 5-year Chattel Mortgage for the full $54,000. Because the Chattel Mortgage structure grants legal ownership of the assets to the business from day one, Dr. Vance was able to have the equipment delivered and installed on 12 June 2026.
The Outcome: Because each of the three assets cost less than $20,000, Dr. Vance claimed an immediate $54,000 tax deduction in her 2025–26 tax return, reducing her company’s tax liability by $13,500 (at the 25% small business tax rate). Her cash flow remained entirely untouched, replaced by a manageable monthly repayment of $1,120, fully offset by the clinic’s increased patient capacity.
If you are planning to purchase machinery, vehicles, IT hardware, or medical equipment before 30 June, speak to our specialist asset finance brokers today. We can secure rapid approvals in as little as 2 hours, ensuring your equipment is delivered, installed, and ready to write off before the EOFY deadline.