Two questions decide how you finance a piece of equipment: who owns it, and when you claim the GST.
Chattel mortgage, finance lease, hire purchase or rental — the four structures look similar on the repayment line but treat ownership, GST and tax very differently. Get the structure right and the asset can start earning before it's paid for. Here they are side by side, plus the Instant Asset Write-Off clock that's ticking toward 30 June 2026.
The four ways to finance business equipment — side by side.
Vehicles, machinery, tools, plant or technology can be financed under any of these. The right one depends on whether you want to own the asset, how you want to claim the GST, and what your accountant advises for your balance sheet. Here's how they actually differ.
Swipe the table sideways to compare →
| Attribute | Chattel MortgageOwn from day one | Finance LeaseFinancier owns it | Hire PurchaseOwn at the end | Rental / Operating LeaseUse, then return |
|---|---|---|---|---|
| Who owns it during the term | Your business owns it from settlement; the lender registers a security interest (a mortgage over the chattel). | The financier (lessor) keeps legal ownership; your business leases and uses it. | The financier owns it during the term; your business hires it. | The financier / rental company owns it throughout. |
| Who owns it at the end | You already own it — the loan is simply discharged (pay any balloon). | Pay the residual to take title, re-lease, or return the asset. | Title transfers to your business after the final payment. | Return, extend, or negotiate to buy at market / fair value. |
| GST / input tax credit timing | Claim GST on the asset price up front (per your GST accounting basis); interest carries no GST. | Claim GST on each lease rental as it is paid. | Agreements from 1 Jul 2012: claim GST up front (as if on a non-cash basis). | Claim GST on each rental payment as it is paid. |
| Income tax deductions | Depreciate the asset (or Instant Asset Write-Off if eligible) plus deduct the interest. | Deduct the lease rentals (business-use portion). | Depreciate the asset plus deduct interest/charges — similar to a chattel mortgage. | Deduct the rental payments (business-use portion). |
| Balloon / residual at end | Optional balloon (residual) to lower repayments; you pay or refinance it at term end. | Residual value set at the start (ATO minimums apply) — a real cost to plan for. | Optional balloon; on the final payment the asset is yours. | No residual owed; the asset is returned (or purchased separately). |
| On the balance sheet | Asset and liability both on the balance sheet. | Typically capitalised (asset plus lease liability). | Asset and liability both on the balance sheet. | Often treated as an operating expense — off balance sheet, subject to accounting standards. |
| Best suited to | Owning the asset and claiming GST up front — very common for vehicles and machinery. | Using an asset without owning it, with predictable rentals. | Owning at term end via an instalment structure. | Fast-obsolescing assets (tech / IT) where flexibility beats ownership. |
Structural attributes reflect ATO GST and depreciation guidance and standard Australian equipment-finance product definitions. GST, depreciation and balance-sheet treatment are general information, not tax advice — how they apply to you depends on your GST registration, accounting basis, business-use proportion and turnover. Confirm the right structure with your registered tax agent or accountant.
$20,000 per asset — but only if it's installed by 30 June 2026.
If your business turns over under $10 million and uses simplified depreciation, you can immediately write off the full cost of an eligible asset costing under $20,000 — per asset, so multiple assets can each qualify. New and second-hand both count. The catch is timing: as the law stands today, the threshold falls back to $1,000 from 1 July 2026.
Sources: Australian Taxation Office — Instant asset write-off; Treasury Laws Amendment (Strengthening… and Other Measures) Act 2025. A government proposal to make the $20,000 threshold permanent from 1 July 2026 has been announced but is not yet law as at July 2026 — do not rely on it as certain. Assets costing $20,000 or more instead go into the small business general pool: deduct 15% of cost in year one, then 30% diminishing value each year after. For a car, the write-off / depreciation is capped at the 2025-26 car limit of $69,674 (maximum GST credit $6,334). Temporary Full Expensing ended for assets installed after 30 June 2023 and is no longer available. Eligibility depends on your turnover, the asset cost, business-use proportion and installation date — this is general information, not tax advice; confirm with your accountant.
Three things that shape an equipment deal.
The asset is the security
Because the equipment itself secures the finance, an ABN holder can often fund it without tipping in property or a large deposit. Low-doc options exist for businesses trading 12–24 months or more.
Terms match the asset's life
Finance typically runs 1 to 7 years (12–84 months), most commonly 3–5 — shorter for fast-depreciating tech and tools, longer for heavy machinery and trucks. A balloon or residual at the end can lower the periodic repayment.
Mostly a commercial product
Equipment finance for business-use assets is generally provided to businesses and is typically outside the National Consumer Credit Protection Act. Consumer-purpose finance is regulated and carries extra disclosure (comparison rate and so on).
Rates move with the cash rate.
There's no single "equipment finance rate" — it's priced off the RBA cash rate, then adjusted for the asset, its age, your trading history, the term and the deposit or balloon. The band below is indicative only.
The benchmark, and where secured equipment finance tends to sit
The RBA cash rate target was held at 4.35% p.a. at the 17 June 2026 meeting. The indicative range (~6.5% to 10%+ p.a.) is a broad synthesis for prime-credit business borrowers on secured equipment finance — not a "from X%" offer and not a single-lender advertised rate. Weaker credit, older or specialised assets and longer terms price higher. Rates move with the cash rate — when it rises, repayments on new and variable facilities generally rise too; a fixed-rate chattel mortgage locks the cost for the term. Any rate is confirmed in writing once your situation is assessed.
If it earns for the business, it can usually be financed.
Vehicles & fleet
Utes, vans, trucks, trailers and fleet vehicles — new or used. Watch the car limit on passenger cars; utes and trucks rated one tonne or more of payload are generally exempt from it.
Plant & machinery
Excavators, loaders, CNC machines, forklifts and production lines. Longer terms suit long-life plant; specialist valuers handle unique or imported assets.
Technology & fit-out
Servers, POS and IT, medical and dental equipment, and office or practice fit-outs. Rental or lease often suits fast-obsolescing tech where you'd rather upgrade than own.
The tax content here is general information, not advice.
GST timing, the Instant Asset Write-Off, depreciation and the car limit are set by the ATO and depend on your specific circumstances — turnover, GST registration, accounting basis, business-use proportion and the date the asset is installed ready for use. We help you compare and structure the finance; your registered tax agent or accountant confirms the tax outcome for your business.
Figures cited are ATO thresholds for the 2025-26 income year and are subject to change by legislation. Not an offer of credit.
Equipment finance, answered straight.
What's the difference between a chattel mortgage, a lease and hire purchase?
They differ mainly on who owns the asset and when you claim the GST. Under a chattel mortgage your business owns the asset from settlement and generally claims the GST on the price up front. Under hire purchase the financier owns it during the term and title passes to you on the final payment — for agreements from 1 July 2012 you can also claim the GST up front. Under a finance lease or rental the financier owns the asset and you claim the GST on each rental payment as it is paid. Which suits you depends on whether you want ownership and how your accountant wants to treat it.
What is the Instant Asset Write-Off threshold right now?
For the 2025-26 income year it is $20,000 per asset for small businesses (aggregated turnover under $10 million) using simplified depreciation. The asset must be first used or installed ready for use by 30 June 2026 to be claimed this year. As currently legislated the threshold drops to $1,000 from 1 July 2026 — a proposal to keep it at $20,000 permanently has been announced but is not yet law. Assets costing $20,000 or more instead go into the small business pool (15% in year one, then 30% diminishing value). This is general information — confirm eligibility with your accountant.
Is equipment finance tax-deductible?
Generally, to the extent the asset is used for business. Under a chattel mortgage or hire purchase you can typically depreciate the asset (or apply the Instant Asset Write-Off if eligible) and deduct the interest. Under a lease or rental you typically deduct the rental payments. GST treatment differs by structure too. The exact deductions depend on your circumstances, so your registered tax agent should confirm them.
Do I need an ABN, and is the loan regulated?
Equipment finance is generally a business product — it usually requires an active ABN and an asset used predominantly for business, and low-doc options exist for established ABN holders. Finance for business-use assets is typically outside the National Consumer Credit Protection Act. Where finance is for a consumer purpose it is regulated and carries additional disclosure such as a comparison rate.
Can I finance used equipment, and how long are the terms?
Yes — most lenders finance used as well as new assets, though an older asset can shorten the maximum term or affect the rate, and a valuation may be needed. Terms usually run 1 to 7 years (most commonly 3–5), matched to the effective life of the asset. A balloon or residual at the end can reduce the periodic repayment.
What interest rate will I pay?
Equipment finance is priced off the RBA cash rate (4.35% p.a. as at 17 June 2026), then adjusted for the asset type and age, your trading history, the term and any deposit or balloon. As a broad indication, prime-credit business borrowers on secured equipment finance often sit somewhere around 6.5% to 10%+ p.a., but that is indicative only — not a "from" rate and not an offer. Rates move with the cash rate, and your actual rate is confirmed in writing once we assess your situation.
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