Most business owners come to us with the asset already picked out. The excavator, the second oven, the third ute for the new apprentice. What they have not decided is that how they finance it matters almost as much as what they pay for it.
Three structures cover most equipment and vehicle finance in Australia. They can produce similar monthly repayments and very different outcomes on your BAS and tax return.
Chattel mortgage
You own the asset from day one and the lender registers a security interest over it. If you are registered for GST and the asset is for business use, you generally claim the GST credit on the full purchase price in the BAS for the period you buy it, rather than across the term. On a $77,000 machine that is a $7,000 credit in one quarter. You also claim depreciation and the interest portion of your repayments.
Owning the asset may allow eligible small businesses to access the instant asset write-off and other depreciation concessions, subject to ATO rules and accountant advice. From 1 July 2026 it is permanent at $20,000 per asset for businesses with aggregated turnover under $10 million, and the test is the cost of the asset, not the amount you borrowed.
It suits anything you intend to keep and run into the ground: work vehicles, trailers, commercial kitchen equipment, long-life plant.
Finance lease
The financier owns the asset and leases it to you for a fixed term with a set residual. GST is charged on each payment, so you claim it progressively rather than up front, and lease rentals are generally deductible to the extent the asset is used for business purposes. At the end you pay the residual, refinance it, or hand it back.
It suits a business that wants a predictable expense line and does not need the GST credit early.
Rental or operating lease
The financier owns the asset and carries the risk on what it is worth at the end. You use it for the term, then return it, extend, or offer to buy. The business generally does not claim depreciation or the instant asset write-off as it does not own the asset. Residual value risk typically remains with the lessor.
It earns its place with anything that dates quickly: IT and point of sale hardware, fleet on a tight replacement cycle.
A note on business vehicles
If the vehicle is a car under the tax definition, depreciation is capped at the car limit, $69,883 for 2026-27, and the GST credit at one eleventh of that, $6,353. Many one tonne utes and commercial vans fall outside that definition, which is why two owners can spend similar money and land in very different positions.
Settle whose name the vehicle goes in early. Personal and business vehicle finance are different products with different assessment and tax outcomes.
Four questions that usually decide it
- How long will you actually keep it? A full working life points to ownership. A three year cycle points to rental.
- Do you need the GST credit now, or spread across the term?
- Can you fund the balloon (sometimes called residual)? It lowers the monthly cost and leaves a lump sum at the end, plus a gap if the asset is worth less by then.
- What are you borrowing for next? If a home loan or premises is coming, this facility will show up in that application.
Getting approved when you are self-employed
Equipment and vehicle finance is usually faster and lighter on paperwork than a home loan. Lenders look at how long your ABN has been active, whether you are registered for GST, whether you are asset backed, the age of the asset, and dealer versus private sale. If one lender’s policy does not fit your circumstances, access to a broad panel of lenders can provide more options than relying solely on dealership finance.
Talk to your accountant before settlement, not after. How these rules land depends on your entity, your turnover and your business use percentage, and the structure is hard to change afterwards.
Talk it through with the Camp Hill team
We work with sole traders, trades businesses, clinics and cafes across Brisbane’s eastern suburbs. Tell us what you are buying and we will walk you through the options. Call us on (07) 3333 5534, or request a call back.
General information only, not tax advice. Please speak to your accountant about your circumstances. Thresholds current at September 2026.
Credit eligibility, lending criteria, fees and charges apply. Finance options are subject to lender approval.
