A tax deduction reduces your taxable income, but it doesn’t eliminate the cost of the asset. If you’re spending $15,000 on equipment your business isn’t ready to use or doesn’t genuinely need, you’re 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’re buying is the tax deadline, it’s worth coming up with a better plan.

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’s 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.

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 hasn’t 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’re considering a purchase that involves any kind of setup or delivery lead time, now is the time to act rather than leaving it until mid-June.

Even if you have the cash available, paying outright for equipment isn’t 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’s 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.