Buying and running a commercial truck can create several different tax considerations for an Australian business. The instant asset write-off is one of them, but it is only part of the picture.
For most truck buyers, depreciation, GST, finance interest and ongoing commercial vehicle expenses will be more relevant than the instant asset write-off because most commercial trucks cost well above the current threshold.
In 2026, eligible small businesses using the simplified depreciation rules can potentially claim an immediate deduction for the business-use portion of eligible assets costing less than $20,000 per asset.
From 1 July 2026, the $20,000 threshold has been made permanent for eligible small businesses with aggregated annual turnover of less than $10 million.
That does not mean a business purchasing a $150,000 truck can immediately write off $150,000. It also does not mean the first $20,000 of a higher-value truck can automatically be claimed upfront.
For trucks above the threshold, depreciation rules generally become more relevant.
The Asset Finance Shop (TAFS) arranges commercial truck finance for Australian businesses buying new and used trucks through dealerships, private sellers and auctions.
This guide explains the instant asset write-off for trucks in 2026, truck depreciation, GST treatment, finance interest and the ongoing business vehicle tax deductions that can apply while you operate the truck.
The instant asset write-off is part of the simplified depreciation rules available to eligible Australian small businesses.
Instead of claiming depreciation on a qualifying asset over several years, an eligible business may be able to claim the business-use portion of the asset's cost as an immediate deduction in the income year it is first used or installed ready for use.
For eligible small businesses, the current threshold is:
Assets costing less than $20,000 each.
The threshold applies separately to each eligible asset.
The write-off reduces taxable income.
It does not mean the government refunds the cost of the truck.
There are two periods to understand because the 2026 calendar year crosses two Australian income years.
For the end of the 2025-26 income year, eligible small businesses could use the $20,000 instant asset write-off for qualifying assets first used or installed ready for use by 30 June 2026.
The asset needed to cost:
Less than $20,000
not:
$20,000 or less.
From the 2026-27 income year, the $20,000 threshold has been made permanent for eligible small businesses with aggregated annual turnover of less than $10 million that use the simplified depreciation rules.
This means the threshold no longer needs to rely on another temporary annual extension.
Broadly, the business generally needs to:
The exact tax treatment should always be confirmed with your accountant.
Potentially, but the truck generally needs to cost less than $20,000 and satisfy the other eligibility requirements.
That makes the instant asset write-off more relevant to some lower-value used commercial vehicles than to a new prime mover or heavy rigid truck.
For example:
Used truck purchased for $18,500: May potentially qualify.
Truck purchased for $19,999: May potentially qualify.
Truck purchased for $20,000: Does not fall below the threshold.
Truck purchased for $80,000: Does not qualify for the $20,000 instant asset write-off.
Prime mover purchased for $250,000: Does not qualify for the $20,000 instant asset write-off.
The business may still be entitled to depreciation and other truck-related deductions.
Generally, no.
The instant asset write-off threshold is not a partial deduction that simply applies to the first $20,000 of every asset.
For example, consider a truck costing:
$120,000
The business cannot generally claim:
$20,000 immediately
and then depreciate:
$100,000
under the small business pool.
Where the truck's total cost is at or above the threshold, the asset is generally dealt with under the applicable depreciation rules instead.
This will be the situation for most commercial truck purchases.
For an eligible business using the simplified depreciation rules, an asset costing $20,000 or more will generally be added to the small business depreciation pool rather than being immediately written off.
Eligible newly acquired pooled assets are generally depreciated at:
15% in the first income year
and then:
30% in later income years
Your accountant should confirm the exact treatment because eligibility, business use, GST and other circumstances can change the calculation.
These are two different ways a business asset may be treated.
An eligible asset below the threshold may potentially be deducted immediately for the relevant business-use portion.
A higher-value truck is generally claimed over time according to the applicable depreciation rules.
For most commercial truck buyers, depreciation will be more relevant because prime movers, rigid trucks, tippers and other heavy vehicles generally cost well above $20,000.
|
Truck Purchase |
General Position |
|
Eligible $18,000 used commercial vehicle |
May potentially qualify for instant asset write-off |
|
$20,000 commercial vehicle |
Does not fall below the threshold |
|
$70,000 rigid truck |
Depreciation generally applies |
|
$160,000 tipper |
Depreciation generally applies |
|
$250,000 prime mover |
Depreciation generally applies |
For an eligible small business using simplified depreciation, higher-value depreciating assets are generally placed into a pool.
Rather than depreciating every truck individually using a separate effective life calculation, eligible pooled assets are dealt with together under the simplified rules.
Newly added assets are generally deducted at 15% in the first income year.
The pool is generally deducted at 30% in later years.
This can be important for transport businesses operating several commercial vehicles.
For example, a business may have:
The tax treatment of these assets can interact through the small business depreciation pool.
Your accountant can confirm how purchases, disposals and the existing pool balance affect the deduction.
Potentially, yes.
The instant asset write-off is not restricted to brand-new vehicles.
An eligible used truck may qualify where:
This can make the rules relevant to some older:
No.
The current threshold applies to eligible assets costing less than $20,000.
That means:
$19,999 may potentially qualify.
$20,000 does not fall below the threshold.
If the purchase is close to the threshold, speak with your accountant before making a decision based on the expected deduction.
A tax write-off is a deduction against taxable income.
It does not mean:
Consider an eligible business claiming a $15,000 instant asset write-off.
The business does not receive $15,000 in cash.
Instead, the deduction reduces taxable income by the eligible amount.
The actual tax benefit depends on factors including:
Potentially, yes.
Financing the truck does not mean the business needs to wait until the finance has been fully repaid before considering depreciation or other eligible deductions.
TAFS primarily arranges commercial truck purchases using a chattel mortgage.
Under a chattel mortgage:
The finance structure and tax treatment are separate.
TAFS handles the commercial truck finance.
Your accountant determines how GST, depreciation, interest and other deductions apply.
Generally, no.
A chattel mortgage repayment usually consists of:
The principal component reduces the amount owed to the lender.
Eligible business-use interest may potentially be deductible.
The truck itself is generally dealt with separately through depreciation or, where eligible, the instant asset write-off.
For example:
Monthly repayment: $4,000
That does not automatically mean the business has a $4,000 monthly tax deduction.
The interest and principal need to be treated correctly.
Eligible finance interest associated with a truck used to produce business income may potentially be deductible.
The deductible amount can depend on:
Keep finance statements showing the interest component and provide them to your accountant.
A deposit changes how much money needs to be borrowed.
It does not simply reduce the purchase price of the asset for tax purposes.
Consider:
Truck purchase price: $35,000
Deposit: $20,000
Amount financed: $15,000
The business is only financing $15,000.
That does not mean the truck becomes a $15,000 asset for the instant asset write-off.
The underlying truck still cost $35,000.
Do not assume that it does.
For example:
Replacement truck price: $80,000
Trade-in value: $30,000
Amount remaining: $50,000
The replacement truck has not simply become a $50,000 asset for tax purposes because a trade-in was used.
The purchase of the replacement truck and disposal of the existing asset generally need to be considered separately.
Your accountant should determine the correct asset cost and disposal treatment.
Not automatically.
A balloon is part of the truck finance structure.
For example:
Truck finance: $150,000
Term: 5 years
Balloon: $30,000
The $30,000 remains outstanding at the end of the term, allowing the regular repayments to be lower.
The balloon does not automatically create a separate $30,000 deduction at the end.
Tax treatment is based on the underlying asset, interest and relevant tax rules rather than simply when principal is repaid.
GST can be a significant part of a commercial vehicle purchase.
An eligible GST-registered business may potentially claim GST credits on the business-use portion of a truck purchase where the normal requirements are satisfied.
The position can depend on:
A dealer purchase may have a different GST position from a private sale.
It depends on the GST position of the business.
For a business registered for GST and entitled to claim the relevant GST credit, the asset cost used for tax purposes will generally exclude the claimable GST.
Where the business is not registered for GST, GST will generally form part of the asset cost.
This can become important where the purchase price is close to the $20,000 threshold.
Do not rely only on the advertised purchase price.
Ask your accountant which amount should be used.
Potentially.
GST and depreciation are separate tax calculations.
Where an eligible GST credit is claimed, that can affect the cost base used for depreciation purposes.
For example, the accountant may need to determine:
It can.
If the private seller is not registered for GST and does not charge GST on the sale, there may be no GST credit available on the purchase.
That does not necessarily prevent the truck from being financed.
TAFS can arrange eligible private-sale truck finance through selected lenders.
The finance and GST positions are separate.
It depends on the transaction.
Auction purchases can include:
The treatment can vary depending on the seller and transaction structure.
Keep the complete auction invoice and provide it to your accountant.
Buying the truck is only part of the tax position.
A commercial truck can also create ongoing business expenses.
Depending on the business and vehicle use, these may potentially include:
These expenses are separate from depreciation and the instant asset write-off.
Your accountant should confirm what can be claimed and whether any private-use adjustment is required.
Fuel used while operating a truck for business may generally form part of the commercial vehicle expenses of the business.
Accurate records should be kept.
For transport operators with several trucks, fuel can be one of the largest operating expenses in the business.
Routine servicing and repairs associated with running a truck for business may potentially be deductible.
However, not every expenditure is treated the same way.
There can be a difference between:
An expense that improves the truck beyond its original condition may have different tax treatment from a normal repair.
Ask your accountant how significant modifications should be treated.
Tyres purchased as part of operating a commercial truck may potentially form part of deductible business running costs.
Keep invoices showing:
Fleet businesses should maintain clear records allocating expenses to each truck.
Commercial vehicle insurance used in running the business may potentially be deductible.
This could include relevant:
The exact treatment depends on the policy and business circumstances.
Business-related vehicle registration expenses may potentially be deductible to the extent they relate to producing business income.
Where the vehicle has mixed business and private use, an adjustment may be necessary.
Tolls incurred while earning business income may potentially form part of deductible commercial vehicle expenses.
For transport businesses operating interstate or through metropolitan toll networks, these amounts can become substantial over the year.
Keep complete toll records.
Business-use percentage matters.
If a truck or vehicle is used partly for private purposes, the deductions may need to be apportioned.
For example:
Business use: 80%
Private use: 20%
The tax treatment may need to reflect that split.
This can affect:
Heavy commercial trucks used solely for transport work may have a very different use profile from a ute or dual-cab vehicle used for both business and personal driving.
Do not assume so.
A higher-value vehicle does not generally become eligible for the instant asset write-off simply because its business-use percentage reduces the deductible portion below $20,000.
For example:
Vehicle cost: $30,000
Business use: 60%
The business-use portion may be $18,000, but that does not automatically mean the original $30,000 asset falls under the less-than-$20,000 threshold.
The threshold test and business-use deduction need to be considered correctly.
Commercial trucks and passenger vehicles can be treated differently.
Certain vehicles that fall within the tax definition of a car may be subject to the car depreciation cost limit.
This can become relevant to businesses purchasing:
A heavy prime mover will generally present differently from a business passenger vehicle.
Ask your accountant how the vehicle is classified before relying on a particular deduction.
For the instant asset write-off, timing is generally based on when the asset is first used or installed ready for use.
This is different from simply:
This can matter significantly around the end of the financial year.
The truck generally needs to be genuinely ready to perform the business function for which it was purchased.
Consider a cab chassis waiting on a body build.
The truck may have been purchased, but it may not yet be ready to perform the intended commercial work.
Other outstanding work might include:
If timing matters for a deduction, confirm the exact position with your accountant before relying on the purchase date alone.
Consider an eligible small business buying a used commercial truck for:
$18,000
The business:
The business may potentially qualify for an immediate deduction for the eligible business-use cost.
It does not receive $18,000 in cash from the government.
The deduction reduces taxable income.
A transport business purchases a rigid truck for:
$150,000
Because the asset costs more than $20,000, it does not qualify for the $20,000 instant asset write-off.
The truck would generally be dealt with under the applicable depreciation rules.
Separate tax considerations may include:
An owner-operator purchases a prime mover for:
$250,000
The business uses a chattel mortgage and contributes a:
$30,000 deposit
The amount financed is:
$220,000
The truck does not qualify for the instant asset write-off simply because part of the purchase has been financed.
The tax calculation is not based only on the $220,000 loan amount.
The accountant considers the truck purchase, GST, depreciation and finance interest separately.
A transport company replaces an existing truck.
New truck: $180,000
Old truck trade-in: $60,000
Existing payout: $25,000
The trade-in may create approximately:
$35,000 of equity
for the finance transaction.
That can reduce how much new finance is required.
However, the tax treatment of:
should be considered separately.
The commercial reason for the truck should come first.
Before purchasing, ask:
A tax deduction can reduce the after-tax cost of a necessary business asset.
It does not make an unnecessary purchase worthwhile.
A truck does not need to qualify for the instant asset write-off to be a good purchase.
A $200,000 prime mover could potentially:
Depreciation and other tax deductions may still apply.
The correct question is not simply:
Can I write the truck off immediately?
It is:
Does this truck make sense for the business, and what tax treatment applies once we buy it?
Good records are important when claiming commercial vehicle expenses.
Keep documents such as:
Keeping organised records throughout the year is considerably easier than trying to reconstruct the position at tax time.
Before making a truck purchase partly because of expected tax benefits, ask:
TAFS handles the truck finance side of the purchase.
TAFS can review:
TAFS starts with a soft credit check that leaves no mark on the applicant's credit file.
The internal credit team assesses the application before the formal lender submission.
TAFS has access to more than 80 bank and non-bank lenders.
Truck finance options can be compared based on:
TAFS can review:
Once the business chooses a suitable option, the formal application is submitted to the selected lender.
TAFS coordinates the remaining lender, dealer or seller requirements through to settlement.
TAFS can arrange finance for eligible new and used trucks purchased through:
Eligible small businesses using the simplified depreciation rules can potentially immediately deduct the business-use portion of eligible assets costing less than $20,000.
The asset must cost less than $20,000.
An asset costing exactly $20,000 does not fall below the threshold.
Yes.
From 1 July 2026, the $20,000 threshold has been made permanent for eligible small businesses with aggregated annual turnover of less than $10 million.
Generally not under the $20,000 instant asset write-off.
A $100,000 commercial truck exceeds the threshold and will generally be dealt with under the applicable depreciation rules.
Generally, no.
The threshold applies to the cost of the asset.
A higher-value truck does not simply receive a partial $20,000 instant deduction.
Potentially.
Eligible second-hand assets can qualify where the business, asset and purchase satisfy the relevant requirements.
Potentially.
Financing the purchase does not itself determine whether the truck qualifies.
Not simply because the amount financed is lower.
A deposit changes the finance amount rather than automatically changing the asset's tax cost.
Do not assume so.
The purchase of the replacement vehicle and disposal of the old truck generally need to be considered separately.
Potentially.
A GST-registered business may be able to claim an eligible GST credit where the normal requirements are satisfied.
It depends on the business's GST position.
For a GST-registered business entitled to a full GST credit, the relevant asset cost will generally exclude the GST that can be claimed.
Potentially.
GST and depreciation are separate calculations.
Your accountant can determine the appropriate cost used for depreciation after GST is considered.
Eligible business-use finance interest may potentially be deductible.
Generally, no.
The repayment usually includes principal and interest.
The tax treatment of each component differs.
Business-related commercial vehicle expenses such as eligible fuel, insurance, registration, repairs, servicing, tyres and tolls may potentially be deductible.
The treatment depends on the business and use of the vehicle.
Not automatically.
A balloon changes the finance repayment structure rather than automatically creating an additional tax deduction.
The important test generally relates to when the truck is first used or installed ready for use.
Simply ordering or paying for it may not be enough.
The truck should make commercial sense first.
Tax deductions can improve the overall financial outcome of a necessary purchase, but they should not be the only reason for buying the vehicle.
The instant asset write-off is only one part of the tax position for a commercial truck.
For most Australian transport businesses purchasing higher-value trucks, depreciation, GST, finance interest and ongoing commercial vehicle expenses will be more relevant.
TAFS can arrange the finance while your accountant confirms how the truck should be treated for tax purposes.
TAFS primarily arranges chattel mortgage finance and can compare suitable truck finance options through access to more than 80 bank and non-bank lenders.
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.