The instant asset write-off can reduce taxable income for eligible Australian small businesses buying qualifying assets.

But for truck buyers, there is an important catch.

Most commercial trucks cost more than the instant asset write-off threshold.

That means buying or financing a $100,000 rigid truck, $180,000 tipper or $250,000 prime mover does not automatically give the business an immediate deduction for the full purchase price.

In 2026, eligible small businesses can potentially immediately deduct the business-use portion of eligible depreciating assets costing less than $20,000 per asset.

From 1 July 2026, the $20,000 threshold became permanent for eligible small businesses with aggregated annual turnover below $10 million that use the simplified depreciation rules.

Where a truck costs $20,000 or more, depreciation will generally become more relevant.

Truck finance is a separate decision again.

Financing a truck does not automatically determine whether it can be written off.

The tax treatment depends on the business, asset and applicable tax rules.

The finance structure determines how the business funds the purchase and how much cash remains available after settlement.

The Asset Finance Shop (TAFS) primarily arranges chattel mortgage finance for commercial trucks and can compare suitable options across more than 80 bank and non-bank lenders.

This guide explains how the instant asset write-off for trucks works in 2026, what happens when a truck exceeds the threshold, how depreciation and GST fit into the calculation and where truck finance can support business cash flow.

What Is the Instant Asset Write-Off?

The instant asset write-off is part of the simplified depreciation rules available to eligible Australian small businesses.

Normally, the cost of a depreciating business asset is claimed over time.

The instant asset write-off allows an eligible business to immediately deduct the taxable-use portion of a qualifying depreciating asset where the asset's cost is below the applicable threshold and it is first used or installed ready for use in the relevant income year.

For eligible small businesses from 1 July 2026, the threshold is:

Less than $20,000 per asset.

The threshold applies separately to each eligible asset.

That means a qualifying business can potentially claim more than one eligible asset in the same income year.

What Does a Tax Write-Off Actually Mean?

A tax write-off is a deduction against taxable income.

It does not mean:

• The government pays for the truck
• The truck becomes free
• The business receives the purchase price back
• The truck loan disappears
• Every dollar of deduction creates one dollar of tax saving

For example, if an eligible business claims a:

$15,000 deduction

that generally reduces taxable income by the eligible amount.

The actual tax benefit depends on factors including:

• Business structure
• Taxable income
• Applicable tax rate
• Business-use percentage
• GST position
• Other deductions

Your accountant should calculate the actual tax effect.

What Is the Instant Asset Write-Off Threshold in 2026?

The calendar year 2026 crosses two Australian income years.

1 January to 30 June 2026

For the 2025-26 income year, the temporary $20,000 threshold applied to qualifying assets first used or installed ready for use by 30 June 2026.

From 1 July 2026

The $20,000 threshold became permanent for eligible small businesses.

The business generally needs:

• Aggregated annual turnover below $10 million
• Eligibility to use the simplified depreciation rules
• An eligible depreciating asset
• The asset to cost less than $20,000
• Business or taxable use of the asset
• The asset to be first used or installed ready for use in the relevant income year

The current legislation permanently extends the $20,000 threshold from 1 July 2026.

Does a Truck Have to Cost Less Than $20,000?

Yes, if the business wants to use the $20,000 instant asset write-off on the truck itself.

The wording less than $20,000 is important.

For example:

Used truck costing $18,000: May potentially qualify.

Used truck costing $19,999: May potentially qualify.

Truck costing exactly $20,000: Does not fall below the threshold.

Truck costing $75,000: Does not qualify for the immediate $20,000 asset write-off.

Prime mover costing $250,000: Does not qualify for the immediate $20,000 asset write-off.

The other eligibility requirements must also be satisfied.

Can I Claim the First $20,000 of a More Expensive Truck?

Generally, no.

The threshold does not work as a partial deduction against every asset.

Consider:

Truck purchase price: $120,000

The business does not generally claim:

$20,000 immediately

and then depreciate:

$100,000.

Where the asset costs $20,000 or more, it generally moves into the applicable depreciation treatment instead.

For small businesses using simplified depreciation, assets costing $20,000 or more are generally added to the small business pool.

What Happens to Trucks Costing $20,000 or More?

For an eligible small business using the simplified depreciation rules, assets that do not qualify for the instant asset write-off are generally added to the small business depreciation pool.

Under those rules, newly acquired pooled assets are generally deducted at:

15% in the first income year

and the pool is generally deducted at:

30% in later income years.

This is likely to be more relevant than the instant asset write-off for many commercial truck purchases because trucks regularly cost well above $20,000.

Example: $150,000 Rigid Truck

Consider a small transport business buying a rigid truck for:

$150,000

The truck exceeds the instant asset write-off threshold.

The business cannot simply claim the full $150,000 immediately under the $20,000 write-off.

Instead, the truck would generally need to be considered under the applicable depreciation rules.

The business may still have tax considerations relating to:

• Depreciation
• GST
• Finance interest
• Running costs

These are separate calculations.

Example: $18,500 Used Truck

Consider an eligible small business purchasing an older used truck for:

$18,500

If:

• The business meets the turnover requirements
• It uses the simplified depreciation rules
• The truck is an eligible depreciating asset
• It is used for business
• It is first used or installed ready for use in the relevant year

the business may potentially claim the eligible business-use portion as an immediate deduction.

Both new and second-hand assets can qualify for the instant asset write-off.

Can Used Trucks Qualify?

Potentially.

The instant asset write-off is not limited to new equipment.

A qualifying used truck can potentially be eligible where its relevant cost is below the threshold and the business satisfies the other requirements.

This may make the write-off more relevant to lower-value:

• Used rigid trucks
• Light commercial trucks
• Older tippers
• Utes
• Vans
• Trailers
• Other transport equipment

For most late-model heavy trucks, however, the purchase price will usually exceed the threshold.

Does GST Affect the $20,000 Threshold?

Yes.

The GST treatment depends on whether the business is registered for GST and entitled to claim an input tax credit.

If the business is registered for GST and entitled to claim the full GST credit, the GST component is generally excluded when calculating the asset's cost for depreciation and instant asset write-off purposes.

If the business is not registered for GST, the GST amount is generally included.

Where only part of the GST credit can be claimed, the treatment is adjusted accordingly.

Example: GST-Registered Business

Suppose a truck or eligible transport asset costs:

$21,450 including GST

If the business is registered for GST and entitled to the full GST credit, the tax cost may be considered excluding the claimable GST.

That could change whether the relevant asset cost falls below the instant asset write-off threshold.

The exact calculation should be confirmed with your accountant.

Does a Trade-In Reduce the Truck Below the Threshold?

Do not assume so.

For depreciation purposes, the purchase of the replacement asset and disposal of the trade-in are generally treated as separate transactions.

For example:

Replacement truck: $60,000
Trade-in: $45,000
Cash difference: $15,000

The fact that the business only pays a $15,000 difference does not automatically mean the new truck has a $15,000 cost for instant asset write-off purposes.

The new asset and disposal of the old one need to be considered separately.

Does a Deposit Reduce the Write-Off Cost?

Not simply because the business borrows less.

Consider:

Truck: $100,000
Deposit: $30,000
Finance: $70,000

The deposit changes the amount financed.

It does not automatically change the underlying tax cost of the asset from $100,000 to $70,000.

The truck would still be well above the $20,000 instant asset write-off threshold.

Can a Financed Truck Qualify for the Instant Asset Write-Off?

Potentially.

The fact that a truck is financed does not by itself determine instant asset write-off eligibility.

Consider:

Asset A

Truck price: $18,500
Financed: Yes

The truck may potentially qualify if the business and asset satisfy all relevant requirements.

Asset B

Truck price: $150,000
Financed: Yes

The truck exceeds the threshold and would generally be dealt with under the applicable depreciation rules.

The finance method is separate from the tax threshold.

How Does Truck Finance Fit Into the Decision?

Truck finance answers a different question.

Tax asks:

How is this asset treated for tax purposes?

Finance asks:

How should the business fund the purchase?

A business may decide to finance a truck because it does not want the entire purchase price leaving its bank account at once.

Consider:

Truck: $180,000
Business cash reserves: $250,000

Paying cash leaves:

$70,000

That remaining cash may still need to fund:

• Diesel
• Insurance
• Wages
• Tolls
• Tyres
• Repairs
• Registration
• Tax
• Working capital

Financing part or all of the truck may preserve more cash inside the business.

The trade-off is the cost of finance.

Chattel Mortgage and Truck Purchases

TAFS primarily arranges truck purchases through a chattel mortgage.

Under a typical chattel mortgage structure:

• The business purchases the truck
• The business owns it from settlement
• The lender registers security over the truck
• The business repays the finance over an agreed term
• A deposit may be included
• Trade-in equity may contribute
• A balloon may potentially be included

The tax treatment remains separate from the loan structure.

Your accountant determines how depreciation, GST and other deductions apply.

TAFS handles the finance.

Can You Claim the Whole Truck Finance Repayment?

Generally, do not assume so.

A truck finance repayment can contain:

• Principal
• Interest

The principal reduces the amount owed to the lender.

Eligible business-use interest may potentially be deductible where the normal tax requirements are satisfied.

The truck itself is dealt with separately through depreciation or, where eligible, the instant asset write-off.

For example:

Monthly truck repayment: $4,500

That does not automatically mean the business receives a:

$4,500 monthly tax deduction.

The different components need to be treated correctly.

Can Finance Interest Be Deductible?

Potentially.

Interest on money borrowed for income-producing business purposes may be deductible where the relevant requirements are satisfied.

The actual outcome depends on:

• Use of the borrowed funds
• Business-use percentage
• Finance structure
• Business circumstances

Your accountant should confirm the treatment.

What Other Truck Expenses May Be Deductible?

Separate from depreciation or the instant asset write-off, a commercial truck business may incur operating costs such as:

• Fuel
• Insurance
• Registration
• Repairs
• Servicing
• Tyres
• Tolls
• Driver costs
• Finance interest

Whether and to what extent these expenses are deductible depends on the business and how the truck is used.

They should not be confused with the instant asset write-off.

Should I Buy a Truck Just for the Tax Deduction?

Generally, the commercial need should come first.

A tax deduction reduces taxable income.

It does not make an unnecessary truck profitable.

Before buying, ask:

• Does the business need the truck?
• Will it generate additional income?
• Will it replace an unreliable vehicle?
• Will it reduce subcontracting?
• Will it improve capacity?
• Does the repayment fit cash flow?
• Does the business have enough working capital after the purchase?

The tax outcome should support a commercially sensible purchase, not create one.

Example: Buying a Prime Mover Before Tax Time

Consider:

Prime mover: $220,000

The truck is needed for a new transport contract.

The instant asset write-off does not apply because the truck costs well above $20,000.

But the purchase may still make commercial sense because it:

• Supports additional freight
• Produces revenue
• Expands fleet capacity
• Reduces subcontracting

The business can then discuss:

Tax treatment with its accountant

and:

Finance structure with TAFS.

Example: Paying Cash vs Financing

Consider:

Truck: $160,000
Cash available: $200,000

Paying Cash

Cash remaining:

$40,000

Advantages:

• No finance interest
• No truck repayment

Potential disadvantage:

• Significantly less working capital

Financing

The business may retain substantially more of its cash reserves.

Advantages may include:

• More working capital
• Cash available for operating expenses
• Greater liquidity

Potential disadvantages:

• Interest
• Fees
• Ongoing repayments

The instant asset write-off does not decide which funding option is better.

Cash flow does.

Does Financing Change Depreciation?

The funding method does not automatically eliminate depreciation.

A financed truck can still be a depreciating business asset.

Where the truck exceeds the instant asset write-off threshold, depreciation may still apply according to the relevant rules.

Your accountant should determine:

• Asset cost
• GST adjustment
• Business-use percentage
• Applicable depreciation method
• Disposal treatment later

When Does the Truck Need to Be Ready for Use?

For instant asset write-off purposes, an eligible asset generally needs to be first used or installed ready for use in the relevant income year.

Simply ordering the truck may not be enough.

For example:

Scenario A

Truck delivered and ready for business use before the relevant year-end.

Scenario B

Deposit paid before year-end, but truck not delivered until the following income year.

The deduction timing may differ.

The ATO's rules focus on when the eligible asset is first used or installed ready for use.

What Records Should You Keep?

Businesses should retain records supporting:

• Purchase price
• Invoice
• GST
• Delivery
• Date first used
• Business-use percentage
• Finance
• Improvements
• Disposal

The ATO specifically notes that records such as invoices, receipts and delivery documentation should be kept to support an instant asset write-off claim.

Questions to Ask Your Accountant Before Buying a Truck

Before relying on a truck tax deduction, ask:

1. Does my business qualify as a small business entity?
2. Is our aggregated turnover below $10 million?
3. Are we using the simplified depreciation rules?
4. Does this truck qualify for the instant asset write-off?
5. What is the relevant tax cost of the truck?
6. Is GST included or excluded from that cost?
7. What business-use percentage applies?
8. If the truck costs more than $20,000, how will it be depreciated?
9. When does the truck need to be first used or ready for use?
10. What GST credit may be available?
11. What finance interest may be deductible?
12. What happens when the truck is sold or traded?
13. How does our existing small business depreciation pool affect the result?

Questions to Ask Before Financing the Truck

Once the tax position is understood, compare the finance.

Ask:

1. What amount do we need to finance?
2. How much deposit should we contribute?
3. Should trade-in equity be used?
4. What interest rate applies?
5. What is the repayment?
6. What finance term suits the truck?
7. Should a balloon be included?
8. What fees apply?
9. What is the total estimated finance cost?
10. How much working capital remains after settlement?
11. Can the truck be paid out or traded early?
12. Which lender best fits the business?

How TAFS Can Finance the Truck

TAFS handles the commercial finance side of the purchase.

The process can include:

1. Reviewing the business and truck purchase
2. Completing a soft credit check
3. Assessing the application through the internal credit team
4. Comparing suitable lenders across more than 80 bank and non-bank lenders
5. Structuring the deposit, finance amount, term and balloon
6. Submitting one formal lender application
7. Coordinating approval and settlement

TAFS can arrange finance for eligible new and used trucks purchased through dealerships, private sellers and auctions.

Frequently Asked Questions

What Is the Instant Asset Write-Off for Trucks in 2026?

Eligible Australian small businesses using simplified depreciation can potentially immediately deduct the taxable-use portion of eligible assets costing less than $20,000.

From 1 July 2026, the $20,000 threshold is permanent.

What Is the Truck Write-Off Limit?

The asset must cost:

Less than $20,000.

An asset costing exactly $20,000 does not fall below the threshold.

Can I Instantly Write Off a $100,000 Truck?

Generally not under the $20,000 instant asset write-off.

A $100,000 truck exceeds the threshold.

Can I Claim the First $20,000 of a $100,000 Truck?

Generally, no.

The threshold applies to the cost of the asset.

Higher-value trucks are generally dealt with under the applicable depreciation rules.

What Happens to Trucks Costing More Than $20,000?

For eligible businesses using simplified depreciation, the asset is generally added to the small business pool.

Newly acquired pooled assets are generally deducted at 15% in the first income year, with the pool generally deducted at 30% in later income years.

Can a Used Truck Qualify?

Potentially.

Both new and second-hand assets can qualify where the business and asset satisfy the relevant requirements.

Can a Financed Truck Qualify?

Potentially.

Financing does not itself determine eligibility.

The truck's tax cost and the business's eligibility are what matter.

Does a Deposit Reduce the Truck Below the Threshold?

Not simply because the amount borrowed becomes smaller.

The deposit affects the finance amount.

Does a Trade-In Reduce the Truck Below the Threshold?

Do not assume so.

The replacement purchase and disposal of the old truck are generally separate transactions for depreciation purposes.

Is the $20,000 Threshold GST Inclusive?

It depends on the business.

For a GST-registered business entitled to the full GST credit, the threshold is generally considered excluding the claimable GST.

For a business that is not GST registered, GST is generally included.

Can I Claim GST and Depreciation?

Potentially.

GST and depreciation are separate calculations.

The GST credit can affect the asset cost used for depreciation.

Can I Claim the Whole Truck Repayment?

Generally, do not assume the entire repayment is deductible.

Principal and interest are treated differently.

Can Truck Finance Interest Be Deductible?

Eligible business-use interest may potentially be deductible.

Speak with your accountant about your circumstances.

Is the Instant Asset Write-Off the Same as Depreciation?

No.

The instant asset write-off allows an eligible qualifying asset to be deducted immediately.

Depreciation generally spreads the deduction for a higher-value asset across time.

Should I Finance a Truck Before 30 June Just for the Tax Benefit?

The business should first determine whether the truck is commercially required and whether the repayment fits its cash flow.

Tax treatment should then be confirmed with an accountant.

Does TAFS Arrange Truck Finance?

Yes.

TAFS primarily arranges chattel mortgage finance for commercial trucks and compares suitable options across more than 80 bank and non-bank lenders.

Finance a Commercial Truck With TAFS

The instant asset write-off is useful for understanding the tax treatment of eligible lower-value business assets.

But for most commercial truck purchases in Australia, the truck will cost substantially more than $20,000.

That means business owners should consider the broader picture:

• Depreciation
• GST
• Finance interest
• Operating expenses
• Purchase price
• Deposit
• Trade-in
• Repayment
• Working capital
• Expected truck income

A $200,000 truck may not qualify for the $20,000 instant asset write-off.

That does not mean it is a poor business purchase.

If the truck supports a contract, increases capacity, replaces unreliable equipment or generates additional income, the commercial case can still be strong.

TAFS can help structure the finance side of the purchase through access to more than 80 bank and non-bank lenders, while your accountant can determine the correct tax treatment.

The Asset Finance Shop (TAFS) is a commercial asset finance brokerage based in Sydney.
Information on this page is general in nature and doesn't take your personal circumstances into account. Speak to a TAFS broker for options tailored to your business, and to your accountant regarding tax treatment.