How to Finance Business Equipment: The 2026 Guide

To finance business equipment, choose the structure first (chattel mortgage, hire purchase, finance lease or operating lease), because it decides who owns the asset, when you claim the GST and the tax deductions, and what happens at the end. Then compare lenders on total cost for that structure. This guide walks through the four structures, what lenders and the RBA publish on rates today, and a decision framework that does not require an accounting degree.

The four mainstream structures

Australian equipment finance is built around four product types. Each one has a specific tax treatment, balance-sheet position, and end-of-term outcome. The right fit is rarely about which one is cheapest at quote time, and almost always about which one matches how you will actually use and replace the asset.

• Chattel mortgage: You take legal and tax ownership of the asset on day one. The lender registers a security on the PPSR. You claim GST on the purchase price up front. You claim depreciation (or the instant asset write-off) plus interest at tax time.
• Hire purchase: The lender owns the asset until final payment, then title transfers to you. Treated as a purchase for tax purposes (you claim depreciation and interest). Now relatively rare; chattel mortgage has largely replaced it.
• Finance lease: The lender owns the asset; you make lease payments and have the option to take ownership or extend at term end. Lease payments are deductible. Post AASB 16, lessees recognise a right-of-use asset and lease liability for accounting purposes.
• Operating lease: The lender owns the asset; you have full use during the term. End-of-term options are return, extend, or upgrade. Lease payments are deductible. Suits assets that will be replaced before end of useful life.

What do equipment finance rates look like in 2026?

Most equipment lenders, including the major banks, quote each deal rather than publish a rate, so there is no honest single range. Three published figures give a guide, each checked on 10 October 2026:

• The RBA benchmark: the average rate on new fixed-rate small business loans funded in August 2026 was 8.09 per cent (RBA table F7, published 8 October 2026). It covers all small business lending, not only equipment, and the cash rate has been 4.60 per cent since 30 September 2026.
• Maker finance: Kubota Australia Finance publishes business offers from 0% to 8.10% p.a. over 36 months on specific series, with minimum deposits of 10% to 20%, most ending 31 October 2026.
• Fees: NAB publishes a $600 set-up fee and $0 monthly fees on its vehicle and equipment loan, with $0 deposit for most purchases. Business finance has no mandatory comparison rate, so add fees to the repayments and compare total cost.

What moves your own quote: the asset's type and age at the end of the term, the term and any balloon, how long the business has traded, its financials or bank statements, and the owners' credit files. The equipment finance hub lists what each bank publishes.

Tax treatment, side by side

The tax outcome is one of the bigger differences between structures. Chattel mortgage and hire purchase put you in the position of legal and tax owner. You claim depreciation against the asset (or the instant asset write-off if eligible), and you claim the interest portion of repayments. The full GST on the purchase price is claimable up front in your next BAS.

Finance lease and operating lease leave the asset in the lessor's ownership. You claim the lease payments as a deductible business expense across the term. There is no depreciation claim on your side and no instant asset write-off available. GST is claimed on each lease payment as it falls due, not up front.

The instant asset write-off in 2026-27: now permanent

The threshold is $20,000 per asset for small business entities with aggregated turnover under $10 million, and the Treasury Laws Amendment (Tax Reform No. 2) Act 2026, which received assent on 26 August 2026, made it permanent for assets first used or installed ready for use from 1 July 2026, ending a decade of one-year extensions. The May 2026 federal Budget announced the change; the Act is what made it law. Each asset must cost less than $20,000. Assets are claimed in the year they are first used or installed ready for use. The write-off is per asset, not in aggregate, so a business buying three sub-$20,000 assets can claim each one fully.

The write-off applies to chattel mortgage and hire purchase assets (you are the tax owner). It does not apply to finance lease or operating lease assets (you are not the tax owner). For SMEs trying to maximise EOFY tax positioning around the threshold, the structure choice is therefore consequential. Our guide on the instant asset write-off walks through the mechanics in detail.

Decision framework

For a typical owner-operated SME buying production equipment, the decision usually comes down to:

1. Will you own the asset at end of useful life? If yes, chattel mortgage is the default. If no, lease structures avoid the disposal risk.
2. Is the asset going to be obsolete before end of useful life? If yes (most IT, some hospitality), operating lease usually wins because the lessor takes the obsolescence risk.
3. Do you want the asset on your balance sheet? Chattel mortgage and finance lease yes; operating lease often (post AASB 16, depending on lease term).
4. Do you want to maximise the immediate tax deduction? Chattel mortgage with assets under the $20,000 instant asset write-off threshold gives the largest immediate deduction.

Documentation you will need

• ABN, business name and entity structure (sole trader, company, trust, partnership)
• Two years of business tax returns and notices of assessment
• Recent BAS (typically last 4 to 6 quarters)
• Equipment supplier quote or invoice with model, serial, GST and net amounts
• Director details; ANZ, for example, publishes that directors' guarantees may be required
• Bank statements for major operating accounts (last 3 to 6 months)