The instant asset write-off allows eligible Australian small businesses to claim an immediate deduction for qualifying business assets below the relevant cost threshold. For transport businesses, the important point is that the threshold applies to the cost of the individual asset, so most prime movers, rigid trucks and other commercial trucks will cost too much to be written off in full under the instant asset write-off. That test applies asset by asset, not to the total amount the business spends on equipment across the year.

For the 2025 to 2026 income year, eligible small businesses with aggregated turnover below $10 million can immediately deduct the business-use portion of eligible assets costing less than $20,000. Assets costing $20,000 or more are generally dealt with under the small business depreciation pool where the simplified depreciation rules apply. (Australian Taxation Office)

For purchases from 1 July 2026, the Australian Government has proposed making the $20,000 threshold permanent. As at 12 August 2026, that measure is still before Parliament and has not yet become law, so businesses purchasing trucks or equipment in the 2026 to 2027 income year should confirm the final rules with their accountant before relying on the proposed threshold. (Parliament of Australia)

The Asset Finance Shop (TAFS) can arrange finance for new and used commercial trucks from any seller, including dealers, auctions and private sales, while the business works with its accountant to determine the tax treatment that applies to the purchase.

This guide explains the instant asset write-off for trucks, how commercial truck depreciation works when the purchase is above the threshold and what business owners should consider before financing a vehicle.

What Is the Instant Asset Write Off?

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

Instead of claiming depreciation on a qualifying asset over several years, an eligible business can claim the business-use portion of the asset's cost as an immediate deduction when:

• The business meets the eligibility requirements
• The full cost of the asset is less than the applicable threshold
• The asset is eligible under the depreciation rules
• The asset is first used or installed ready for business use during the relevant income year

The threshold applies to each individual asset. (Australian Taxation Office)

This is particularly important when discussing trucks because an instant asset write-off does not mean every business vehicle can be immediately deducted.

What Is the Instant Asset Write Off Threshold for 2026?

There are two periods to consider when discussing the 2026 truck tax deduction.

2025 to 2026 Income Year

For the income year ending 30 June 2026, the instant asset write-off threshold is less than $20,000 per eligible asset for eligible small businesses with aggregated turnover below $10 million. This extension is law. (Australian Taxation Office)

This means an asset costing $19,500 may potentially qualify, subject to the business and asset meeting the remaining requirements.

An asset costing exactly $20,000 does not fall below the threshold. Where an asset costs $20,000 or more, none of the cost can be written off immediately. The full cost is allocated to the small business depreciation pool instead, so there is no partial $20,000 deduction.

2026 to 2027 Income Year

The Government has proposed permanently extending the $20,000 instant asset write-off from 1 July 2026 for small businesses with aggregated turnover below $10 million.

As at 12 August 2026, the legislation is still before Parliament. Businesses purchasing equipment in the 2026 to 2027 income year should therefore check the final legislation before calculating a deduction based on the proposed threshold. (Parliament of Australia)

Can You Instantly Write Off a Truck in 2026?

Potentially, but only when the truck's cost is below the applicable instant asset write-off threshold and the other eligibility requirements are satisfied.

For most commercial truck purchases, this means the entire truck will not qualify for an immediate write-off because the purchase price will usually exceed $20,000.

Examples could include:

• Prime movers
• Rigid trucks
• Tippers
• Crane trucks
• Refrigerated trucks
• Tilt trays
• Concrete trucks
• Vacuum trucks
• Larger commercial vehicles

A business purchasing a $150,000 truck cannot simply claim a $150,000 instant asset write-off because it uses the vehicle for business. It also cannot claim $20,000 of the purchase price up front. Where an asset costs $20,000 or more, the whole cost is allocated to the small business pool rather than part of it being deducted immediately.

The truck may still qualify for depreciation under the applicable tax rules.

What Happens if the Truck Costs More Than $20,000?

An eligible small business using the simplified depreciation rules generally places higher-cost depreciating assets into its small business depreciation pool when the asset costs the same as or more than the instant asset write-off threshold.

Under the simplified depreciation rules, eligible newly acquired pooled assets are generally depreciated at 15% in the first income year and the pool is then depreciated at 30% in later years. (Australian Taxation Office)

For many transport businesses, this is the more relevant tax treatment because commercial trucks usually cost considerably more than the instant asset write-off threshold.

Your accountant can confirm whether your business uses simplified depreciation and how the truck should be treated.

Does the Instant Asset Write Off Mean You Get the Purchase Price Back?

No.

The instant asset write-off is a tax deduction. It is not a cash payment from the government and it does not reduce the balance of your truck finance.

A deduction reduces taxable income.

For example, if an eligible business purchases a qualifying $15,000 asset and claims the full business-use amount as an immediate deduction, that does not mean the business receives $15,000 back.

The actual tax benefit will depend on factors including:

• Business structure
• Tax rate
• Taxable income
• Business-use percentage
• GST treatment
• Other deductions and tax circumstances

This is why the potential deduction should be discussed with an accountant before making an equipment purchase primarily for tax reasons.

Can a Financed Truck Still Receive Tax Deductions?

Financing the truck does not mean the business has to wait until the loan is completely repaid before considering depreciation or other eligible deductions.

TAFS primarily arranges truck purchases using a chattel mortgage.

Under a chattel mortgage:

• The business owns the truck from settlement
• The lender registers security over the vehicle
• The business makes repayments over the agreed term
• A balloon payment may be included
• The lender's security is removed when the finance is repaid

The business and its accountant can then determine the appropriate GST, depreciation and interest treatment based on the circumstances.

Finance allows the business to spread the cash cost of acquiring the truck even though the tax treatment of the asset is considered separately.

Does the Instant Asset Write Off Apply to Used Trucks?

Eligible second-hand assets can be included under the simplified depreciation and instant asset write-off rules, subject to the applicable requirements and threshold. (Australian Taxation Office)

This can be relevant for smaller commercial vehicles or lower-value used equipment costing less than $20,000.

For a used truck costing above the threshold, the purchase may instead be depreciated under the applicable rules.

TAFS can arrange finance for eligible used trucks purchased through:

• Dealers
• Private sellers
• Auctions

The available finance will depend on the truck's age, kilometres, condition, value and lender requirements.

Does the $20,000 Limit Apply to Every Truck Separately?

Yes, the instant asset write-off threshold operates on a per-asset basis.

For example, purchasing several separate qualifying assets below the threshold does not automatically prevent the business from claiming the write-off simply because the combined purchase amount exceeds $20,000. (Australian Taxation Office)

However, businesses should not assume that a single truck can be artificially divided into smaller components simply to bring each amount below the threshold.

Whether equipment or additions are separate depreciating assets is a tax question that should be confirmed with an accountant.

Can Truck Accessories Qualify Separately?

Potentially.

A truck purchase may involve additional business equipment such as:

• Toolboxes
• Communication equipment
• Refrigeration equipment
• Safety equipment
• Specialist attachments
• Body equipment
• Other business accessories

Whether an item is treated as a separate depreciating asset or forms part of the truck's cost depends on the nature of the item and the applicable tax rules.

This can make a meaningful difference where additional equipment costs less than the instant asset write-off threshold even though the truck itself does not.

Your accountant should determine which components are separate assets for tax purposes.

Are Commercial Trucks Subject to the Car Depreciation Limit?

Australian tax rules distinguish between a "car" and other types of motor vehicles.

For income tax purposes, the ATO defines a car as a motor vehicle designed to carry fewer than nine passengers and a load of less than one tonne. Vehicles designed to carry one tonne or more fall into the ATO's "other vehicles" category. (Australian Taxation Office)

This distinction matters because the car depreciation cost limit applies to vehicles that meet the tax definition of a car.

A genuine commercial truck designed to carry one tonne or more will generally fall outside that definition.

However, not every vehicle used by a business is automatically treated as a commercial truck for tax purposes. Utes, dual cabs, vans and other lighter vehicles need to be considered according to their design and specifications.

What Was the Car Depreciation Limit for 2025 to 2026?

For vehicles that meet the tax definition of a car, the depreciation cost limit for the 2025 to 2026 income year is $69,674. (Australian Taxation Office)

This is separate from the $20,000 instant asset write-off threshold.

The two figures should not be confused:

• $20,000 instant asset write-off threshold: Determines whether an eligible asset can potentially be immediately deducted under the small business simplified depreciation rules.
• Car depreciation limit: Limits the cost used to calculate depreciation for vehicles that meet the tax definition of a car.

Commercial trucks designed to carry one tonne or more are generally treated as other vehicles rather than cars for this purpose. (Australian Taxation Office)

Can You Claim GST on a Truck Purchase?

A GST-registered business may be able to claim an eligible GST credit when purchasing a vehicle for business use.

The available amount depends on factors including:

• GST registration
• Whether GST was included in the purchase
• Business-use percentage
• Seller type
• Tax invoice requirements
• The type of vehicle

A truck purchased privately from a seller who is not registered for GST may have different GST treatment from a truck purchased from a GST-registered dealer.

GST treatment should be confirmed with your accountant before relying on the expected credit as part of the purchase.

What Other Truck Expenses Can Be Tax Deductible?

The instant asset write-off only deals with the cost of an eligible depreciating asset.

A transport business can also incur ongoing expenses associated with operating the truck.

Eligible business motor vehicle expenses can include items such as:

• Fuel and oil
• Repairs
• Servicing
• Insurance
• Registration
• Interest on vehicle finance
• Depreciation

Private use must be excluded when an expense has both business and private components. (Australian Taxation Office)

Owner-operators should keep records that allow their accountant to identify the business portion of expenses accurately.

Is Interest on Truck Finance Tax Deductible?

Where the finance is used for an income-producing business asset, eligible interest expenses may be deductible to the extent they relate to business use.

The principal portion of a chattel mortgage repayment is treated differently from the interest component.

For example, a monthly truck repayment may contain both:

• Principal that reduces the loan balance
• Interest charged by the lender

The entire repayment should not automatically be treated as a tax deduction.

Your accountant can use the finance schedule to determine the appropriate interest amount.

Does a Balloon Payment Increase the Tax Deduction?

A balloon payment does not create an additional tax deduction simply because a larger amount remains payable at the end of the finance term.

A balloon is part of the finance structure.

It can:

• Reduce regular repayments
• Preserve more cash flow during the finance term
• Leave a larger final payment
• Affect the total interest paid
• Influence future trade-in or refinancing decisions

The depreciation treatment of the truck is based on the applicable tax rules rather than how much principal is repaid each month. Your accountant will be best placed to advise on how this applies to your business.

Can You Buy a Truck Before 30 June and Claim It That Financial Year?

Purchasing or ordering the truck before 30 June does not necessarily mean the deduction belongs in that income year.

Under the instant asset write-off rules, the asset generally needs to be first used or installed ready for use during the relevant income year. (Australian Taxation Office)

For a truck purchase, businesses should consider when:

• The vehicle is delivered
• Settlement occurs
• Registration is completed
• The truck is available to the business
• It is ready to perform business work

This can become particularly important when a truck is ordered close to 30 June but delivery is delayed.

Speak with your accountant before relying on the timing of a tax deduction.

Should You Buy a Truck Just for the Tax Deduction?

Tax treatment should be part of a commercial decision, not the entire reason for purchasing a truck.

Before financing another vehicle, consider:

• Whether there is enough work for it
• Expected revenue
• Current fleet utilisation
• Driver availability
• Fuel costs
• Insurance
• Registration
• Maintenance
• Finance repayments
• Available working capital
• Expected replacement cycle

A tax deduction reduces taxable income. It does not make the truck free.

The strongest purchase is one that makes commercial sense for the transport business before the tax benefit is considered.

How Finance Can Support a Truck Purchase

Asset finance allows a business to acquire a truck without paying the complete purchase price in cash. That can help the business preserve working capital for fuel, wages, maintenance and other running costs, keep funds available for unexpected expenses, and put the truck to work earning revenue while the cost is spread across its working life.

TAFS primarily uses chattel mortgage finance for commercial truck purchases.

The structure can include:

Finance Term

The cost is spread across an agreed period.

Deposit

A deposit can reduce the amount financed but is not required for every application.

Trade-In

Existing truck equity can sometimes be used as the business's contribution toward the new vehicle.

Balloon Payment

A balloon can reduce regular repayments by leaving a final amount at the end of the term.

The finance should be structured around the business's cash flow and expected working life of the truck rather than around the tax deduction alone.

Can Sole Traders Claim Truck Tax Deductions?

Sole traders can claim eligible business expenses and depreciation associated with business vehicles.

Where a truck is used partly for private purposes, only the eligible business portion can generally be claimed.

The records and calculation method required will depend on the vehicle and circumstances.

A genuine heavy commercial truck can also be treated differently from a passenger vehicle under the motor vehicle tax rules.

Your accountant can determine the appropriate approach.

What Records Should a Transport Business Keep?

Good records are important when purchasing and financing a truck.

Keep copies of:

• Dealer invoice
• Private-sale agreement
• Finance contract
• Repayment schedule
• Deposit receipt
• Trade-in paperwork
• Registration documents
• Insurance documents
• Fuel receipts
• Repair invoices
• Servicing records
• Business-use records
• Truck sale or trade-in documents
• Finance payout statements

The ATO generally requires businesses to maintain records supporting motor vehicle expense claims, including relevant finance and purchase documents. (Australian Taxation Office)

How TAFS Arranges Truck Finance

1. Initial Assessment

TAFS reviews the business, truck purchase, finance requirement and available documentation.

2. Soft Credit Check

The initial assessment begins with a soft credit check that leaves no mark on the applicant's credit file.

3. Internal Credit Review

The TAFS internal credit team assesses the application before a formal lender submission.

4. Finance Structure

The proposed deposit, term, repayments and balloon are considered around the truck, the business cash flow and what the business needs.

5. Formal Application

The application is submitted to the selected lender.

6. Approval and Settlement

TAFS coordinates the finance documents and settlement with the truck seller.

The business can then work with its accountant to determine the deductions and GST treatment that apply to the purchase.

Questions to Ask Your Accountant Before Buying a Truck

Before relying on the instant asset write-off or another deduction, first satisfy yourself that the purchase makes business sense: that there is committed work or a new contract behind it, that you know what that work is worth over the finance term, and that it will still make money after repayments, fuel, driver costs and maintenance. Then ask your accountant:

1. Is my business eligible for the simplified depreciation rules?
2. What instant asset write-off threshold applies to this income year?
3. Has the 2026 to 2027 proposed threshold become law?
4. Does my truck fall under the tax definition of a car or another vehicle?
5. Does the car depreciation limit apply?
6. How will a truck above the instant asset write-off threshold be depreciated?
7. Can I claim GST on the purchase?
8. Does buying through a private seller change the GST treatment?
9. What portion of the finance interest can be claimed?
10. Does a balloon payment change the tax treatment?
11. When will the truck be considered first used or ready for use?
12. What records should I keep?
13. How will a future sale or trade-in be treated?

Frequently Asked Questions

Can I Claim the Instant Asset Write Off on a Truck in 2026?

Potentially, but the truck must cost less than the applicable threshold and meet the other eligibility requirements.

For the 2025 to 2026 income year, the threshold is less than $20,000 for eligible small businesses with aggregated turnover below $10 million. (Australian Taxation Office)

Most commercial trucks will cost more than this and will therefore be depreciated under the applicable rules rather than immediately written off in full.

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

For the income year ending 30 June 2026, the threshold is $20,000, meaning the asset must cost less than $20,000 to qualify. (Australian Taxation Office)

The Government has proposed permanently extending the $20,000 threshold from 1 July 2026, but as at 12 August 2026 the legislation has not yet passed Parliament. (Parliament of Australia)

Can I Write Off a $150,000 Truck Immediately?

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

Where an eligible small business uses simplified depreciation, an asset above the threshold will generally be allocated to the small business depreciation pool rather than immediately deducted in full. (Australian Taxation Office)

Can I Finance a Truck and Still Claim Depreciation?

Financing and depreciation are separate considerations.

Under a chattel mortgage, the business owns the truck from settlement while the lender holds security over it. The business's accountant can then determine the appropriate depreciation and tax treatment.

Does the Instant Asset Write Off Apply to Used Trucks?

Eligible second-hand depreciating assets can potentially qualify where they meet the applicable instant asset write-off requirements and cost threshold. (Australian Taxation Office)

Do Commercial Trucks Have a Depreciation Limit?

The passenger car depreciation limit applies to vehicles meeting the tax definition of a car.

Vehicles designed to carry one tonne or more are categorised differently, so a genuine commercial truck may fall outside the car limit. (Australian Taxation Office)

Can I Claim Truck Finance Repayments as a Tax Deduction?

You should not automatically treat the entire repayment as deductible.

The interest component may be deductible to the extent it relates to business use, while repayment of loan principal is treated separately.

Does a Balloon Payment Give Me a Bigger Tax Deduction?

Not by itself.

A balloon changes the finance repayment structure. It does not increase the cost of the truck used for depreciation simply because more principal remains outstanding at the end.

Do I Need to Pay Cash to Use the Instant Asset Write Off?

Asset finance can be used to purchase eligible business equipment while spreading the cash cost over time.

The tax treatment should be determined separately based on the business, asset and applicable rules.

Should I Speak With My Accountant Before Financing a Truck?

Yes.

Tax rules can change between income years, and the outcome depends on the business structure, vehicle, GST position and intended use.

Finance a Truck With TAFS

TAFS can help arrange finance for new and used trucks while you work with your accountant to determine the tax treatment that applies to your purchase.

Contact The Asset Finance Shop or apply online at www.tafs.com.au.

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.