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.
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.
A tax write-off is a deduction against taxable income.
It does not mean:
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:
Your accountant should calculate the actual tax effect.
The calendar year 2026 crosses two Australian income years.
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.
The $20,000 threshold became permanent for eligible small businesses.
The business generally needs:
The current legislation permanently extends the $20,000 threshold from 1 July 2026.
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.
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.
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.
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:
These are separate calculations.
Consider an eligible small business purchasing an older used truck for:
$18,500
If:
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.
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:
For most late-model heavy trucks, however, the purchase price will usually exceed the 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.
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.
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.
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.
Potentially.
The fact that a truck is financed does not by itself determine instant asset write-off eligibility.
Consider:
Truck price: $18,500
Financed: Yes
The truck may potentially qualify if the business and asset satisfy all relevant requirements.
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.
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:
Financing part or all of the truck may preserve more cash inside the business.
The trade-off is the cost of finance.
TAFS primarily arranges truck purchases through a chattel mortgage.
Under a typical chattel mortgage structure:
The tax treatment remains separate from the loan structure.
Your accountant determines how depreciation, GST and other deductions apply.
TAFS handles the finance.
Generally, do not assume so.
A truck finance repayment can contain:
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.
Potentially.
Interest on money borrowed for income-producing business purposes may be deductible where the relevant requirements are satisfied.
The actual outcome depends on:
Your accountant should confirm the treatment.
Separate from depreciation or the instant asset write-off, a commercial truck business may incur operating costs such as:
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.
Generally, the commercial need should come first.
A tax deduction reduces taxable income.
It does not make an unnecessary truck profitable.
Before buying, ask:
The tax outcome should support a commercially sensible purchase, not create one.
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:
The business can then discuss:
Tax treatment with its accountant
and:
Finance structure with TAFS.
Consider:
Truck: $160,000
Cash available: $200,000
Cash remaining:
$40,000
Advantages:
Potential disadvantage:
The business may retain substantially more of its cash reserves.
Advantages may include:
Potential disadvantages:
The instant asset write-off does not decide which funding option is better.
Cash flow does.
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:
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:
Truck delivered and ready for business use before the relevant year-end.
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.
Businesses should retain records supporting:
The ATO specifically notes that records such as invoices, receipts and delivery documentation should be kept to support an instant asset write-off claim.
Before relying on a truck tax deduction, ask:
Once the tax position is understood, compare the finance.
Ask:
TAFS handles the commercial finance side of the purchase.
The process can include:
TAFS can arrange finance for eligible new and used trucks purchased through dealerships, private sellers and auctions.
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.
The asset must cost:
Less than $20,000.
An asset costing exactly $20,000 does not fall below the threshold.
Generally not under the $20,000 instant asset write-off.
A $100,000 truck exceeds the threshold.
Generally, no.
The threshold applies to the cost of the asset.
Higher-value trucks are generally dealt with under the applicable depreciation rules.
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.
Potentially.
Both new and second-hand assets can qualify where the business and asset satisfy the relevant requirements.
Potentially.
Financing does not itself determine eligibility.
The truck's tax cost and the business's eligibility are what matter.
Not simply because the amount borrowed becomes smaller.
The deposit affects the finance amount.
Do not assume so.
The replacement purchase and disposal of the old truck are generally separate transactions for depreciation purposes.
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.
Potentially.
GST and depreciation are separate calculations.
The GST credit can affect the asset cost used for depreciation.
Generally, do not assume the entire repayment is deductible.
Principal and interest are treated differently.
Eligible business-use interest may potentially be deductible.
Speak with your accountant about your circumstances.
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.
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.
Yes.
TAFS primarily arranges chattel mortgage finance for commercial trucks and compares suitable options across more than 80 bank and non-bank lenders.
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:
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.