EOFY 2026 Business Finance Checklist: Instant Asset Write-Off, Equipment Finance & Tax Timing

The 2025-26 financial year closes on 30 June 2026. For an SME, the six weeks before EOFY are when most of the meaningful tax planning gets done, and they are also when most of the avoidable mistakes get made. The biggest single lever is asset purchases: the way you fund and time an asset can change the after-tax cost by 25 to 30 per cent. This is a practical checklist of what to look at and in what order, with the dollar maths for each decision.

The $20,000 instant asset write-off, confirmed for 2025-26

The federal government has confirmed the $20,000 instant asset write-off threshold for the 2025-26 financial year. Eligible small businesses (aggregated turnover under $10 million) can immediately deduct the full cost of an asset costing less than $20,000, in the year the asset is first used or installed ready for use. The threshold applies per asset, not per business, so a business can write off multiple sub-$20,000 assets in the same year. This is a temporary measure. There is no current legislation extending it into 2026-27. If your business has been deferring small-asset purchases, doing them in the next six weeks (and ensuring they are installed and ready for use before 30 June 2026) captures the deduction at the higher threshold. From 1 July 2026, the threshold is currently expected to revert to $1,000 unless Parliament passes a new extension. Worked example. A trade business buys a $15,000 piece of equipment on 25 June 2026 and has it installed and ready for use by 30 June. The full $15,000 is deductible in the 2025-26 return. At a 25 per cent company tax rate, that is $3,750 of tax saved this year. The same purchase delayed to 1 July 2026, with the threshold reverting to $1,000, would only be deductible via standard depreciation: roughly $3,000 of deduction in year one, worth $750 of tax, with the remainder spread over the asset's effective life.

The five-question test before any EOFY asset purchase

The instant write-off is real money, but it should not be the only reason to buy an asset. If the asset would not have made sense without the deduction, the deduction is not enough to make it sensible. Run any EOFY purchase through these five questions before you commit:

1. Will I use it? If the asset will sit unused for the first three months of 2026-27, the deduction is being eroded by depreciation in the absence of utilisation.
2. Will it be installed and ready for use by 30 June 2026? "Delivered" is not enough. The asset must be capable of being used in the business by year end. Order with installation lead time in mind, especially for fitted equipment.
3. Is it under $20,000 ex-GST? The threshold applies to the GST-exclusive cost. A $19,800 ex-GST asset qualifies; a $20,500 ex-GST asset does not, and would need to be depreciated under normal rules.
4. Is it being used for business purposes more than 50 per cent of the time? The ATO requires the asset to be predominantly used for business. Mixed-use assets can still attract a deduction, prorated to business use.
5. Am I being marketed an asset I do not actually need? EOFY is also peak season for dealer and supplier sales pressure. The deduction does not change whether the underlying asset earns its keep.

How to fund an EOFY asset: cash vs chattel mortgage vs hire purchase

For an asset that passes the five-question test, the next decision is how to fund it. Most SMEs use one of three structures:

Cash purchase

If you have surplus cash, paying cash is simple. The asset enters the books, the GST is claimed in the BAS, and the instant write-off (or depreciation) attaches. The downside is the opportunity cost of the cash, and the loss of the loan-interest deduction. For a business operating with a working-capital buffer of two months or less, paying $20,000 cash to claim a $5,000 tax saving is a poor trade.

Chattel mortgage

A chattel mortgage is the most common asset-finance structure for SMEs. The lender provides finance, you take ownership of the asset on day one, and the asset is held as security. The GST on the asset is claimable in the BAS in the period of purchase, the depreciation or instant write-off attaches as if you had paid cash, and the interest portion of each repayment is deductible against business income. The loan typically runs three to seven years, with an optional balloon payment at the end to reduce monthly repayments. For a $20,000 asset financed over five years at a typical chattel mortgage rate around 8.99 per cent (May 2026), the monthly repayment is about $415, and the total interest paid over the term is around $4,900. The deduction profile in year one: full $20,000 instant write-off, plus interest paid in the first year of about $1,650, total $21,650 of deductible expense in 2025-26. At a 25 per cent company tax rate, that is $5,413 of tax saved in year one against a cash outlay of just $4,980 (12 monthly payments).

Hire purchase

Hire purchase is similar to chattel mortgage in tax treatment but the legal ownership of the asset transfers at the end of the term, not on day one. The GST is claimed across the term of the agreement rather than upfront. For most SMEs, chattel mortgage is the cleaner structure unless there is a specific reason to defer ownership.

Operating and finance leases

Operating leases are off-balance-sheet for accounting purposes, with the full lease payment deductible. They suit businesses that want to refresh the asset on a defined cycle (typically vehicles) and do not want residual value risk. Finance leases sit between operating lease and chattel mortgage. Both have a place; both are usually less tax-efficient than a chattel mortgage if you intend to keep the asset beyond its lease term.

EOFY 2026 checklist: what to look at in priority order

1. Asset purchases under $20,000

Identify any small-asset purchases planned for the next six months that could be brought forward. Ensure they pass the five-question test. Confirm installation timing with the supplier. Finance via chattel mortgage if cashflow is preferred to a one-off cash outlay.

2. Larger asset purchases (over $20,000)

For assets over the instant write-off threshold, the deduction is via standard depreciation. Bring forward purchases that would have happened in 2026-27 if you can use the year-one depreciation deduction productively (typically year one is 200 per cent of the prime-cost rate under the diminishing-value method). A chattel mortgage adds the interest deduction.

3. Super contributions

The concessional super contribution cap is $30,000 for 2025-26. Voluntary employer contributions or salary sacrifice that lift you to the cap are deductible against business income (if employer-funded) or assessable income (if personal-concessional). Super contributions must be received by the fund before 30 June 2026 to count for the year. The standard advice: pay June quarter super by mid-June at the latest to avoid clearing-house delays.

4. Bad debts

Genuine bad debts can be written off as a deduction. The debt must be written off in the books before 30 June 2026 and the business must have made reasonable efforts to recover it. A debt that is merely overdue is not a bad debt. Review the receivables ledger now.

5. Prepay expenses

Eligible small businesses can prepay deductible expenses for up to 12 months in advance and claim the full deduction in the year of payment. Common candidates: rent, insurance, subscriptions, professional memberships, interest on business loans. Useful in a year when income is high.

6. Stock take and obsolete inventory

Conduct a stock take. Obsolete or damaged stock can be written down to net realisable value. Slow-moving stock sitting at cost is overstating taxable income; review and adjust.

7. Fuel tax credits

If your business uses diesel in heavy vehicles or off-road plant, fuel tax credits are claimable in the BAS. Rates change each February and August; ensure you are claiming at the current rate. For a transport SME, missed fuel tax credit claims can be material.

8. Loan facility reviews

Review business loans, overdraft facilities, and equipment finance arrangements. EOFY is a natural review point. Look for facilities that have rolled over at uncompetitive rates, unused limits that are affecting serviceability, and facilities that have run past their useful life. A refinance to a tighter structure is often worth $1,000s a year in interest.

9. R&D tax incentive

If your business undertook eligible R&D activities in 2025-26, the R&D Tax Incentive provides a refundable or non-refundable tax offset. Documentation must be filed with AusIndustry within 10 months of the end of the income year. The lodgement is non-trivial; start the documentation now if you are claiming.

10. Director loans and Division 7A

Review loans between the business and directors or shareholders. Division 7A applies if loans are not on commercial terms or not repaid before the due date of the company tax return. The minimum interest rate is set annually; check the current benchmark.

The financing decision matrix

A simple rule of thumb for EOFY asset purchases:

• Asset under $20,000, business has surplus cash and good buffer: cash purchase
• Asset under $20,000, business is cashflow-conscious: chattel mortgage, claim the instant write-off
• Asset over $20,000 (vehicle, plant): chattel mortgage, claim year-one depreciation plus interest
• Asset where you want to refresh on a defined cycle: operating lease
• Asset where you do not need ownership: operating lease or rental

The objective is not to maximise the deduction; it is to maximise the after-tax cost-effectiveness of an asset you would have bought anyway. A 25 per cent tax saving on a $20,000 asset is $5,000. A $20,000 asset that sits unused is a $20,000 mistake. The decision sequence matters in that order: business need first, then structure, then deduction. For SMEs that want a second opinion on the financing structure for an EOFY asset purchase, our equipment finance team can model the after-tax cost across the three main structures (cash, chattel mortgage, lease) using your actual cost-of-capital and tax position. The conversation is free and we are not the financier; the recommendation goes to the lender on our panel that fits your structure best.