Instant asset write-off

What is the instant asset write-off?

  • The instant asset write-off allows eligible businesses to claim an immediate deduction for certain costs relating to depreciating assets.3
  • The Federal Budget 2020-21 introduced temporary measures that have built on the instant asset write-off previously in place.

How it works

  • Businesses with an aggregated turnover of up to $5 billion may be eligible.
  • Depreciating assets may include new business vehicles and equipment. For businesses with aggregated turnover of less than $50 million, the assets can be second-hand.
  • Businesses with aggregated turnover between $50 million and $500 million may be eligible to deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 and first used or installed by 30 June 2021.
  • Deduction claims may be made for the year in which the equipment is used or installed ready for use. This may be the same year in which you finance the equipment.
  • You may be able to borrow funds to purchase equipment and still claim a deduction for the cost of eligible items.
  • Generally, depreciating assets must be acquired after 7:30pm AEDT on 6 October 2020 and installed ready for use by 30 June 2022.
  • For detailed information on the measures visit the ATO website.
  • Further changes announced by the Federal Treasurer on 23 November 2020 now mean more businesses may qualify. A new alternative test will apply requiring businesses to have less than $5 billion in statutory and ordinary income (generally income assessable in Australia) in either the 2018-19 or 2019–20 income year AND have invested more than $100 million in tangible depreciating assets in the period 2016-17 to 2018-19. This change will mean businesses with an aggregated turnover of more than $5 billion due to the income of an overseas parent or associate will now be able to qualify provided they meet the 'alternative test'. For detailed information relating to the alternative income test visit the ATO website.

What your business could now claim

  • Unlimited number of new eligible assets of any dollar value (and eligible asset improvements for new and existing assets), if your business has an aggregated annual turnover of less than $5 billion.
  • If your business has an aggregated turnover of less than $50 million, the full cost of all eligible second-hand assets may also be claimed.

Case studies

All amounts, rates and calculations shown are examples only and are not necessarily complete or accurate. You'll need to seek your own tax and financial advice. 

Dave's carpentry business

Dave owns a carpentry business with a turnover of $9 million.

In late October 2020, he decides to upgrade one of his work trucks and his factory lathe machinery.

Dave spends $100,000 on a new truck and $240,000 on second-hand lathe equipment.

In preparing his tax return for the year ending 30 June 2021, Dave should be entitled to claim $340,000 as an immediate tax deduction for that financial year.

Emma's construction business

Emma is the CFO of a construction business with a turnover of $40 million.

In late October 2020, she decides to buy 10 new excavators and 8 second-hand bulldozers. 

The business spends $350,000 on each of the new excavators (which includes $50,000 on improvements for each) and $100,000 on each second-hand bulldozer.

In preparing the business' tax return for the year ending 30 June 2021, the business should be entitled to claim $350,000 for each new excavator as an immediate tax deduction. As the business' aggregated annual turnover is less than $50 million, it could also claim the 8 second-hand bulldozers adding an additional $800,000 immediate deduction. 

Borrow and still claim the write-off

If you use financing to purchase the asset (such as an equipment loan), you may still be entitled to claim the immediate deduction.3

Here are three benefits to consider: 

1. Hold on to your cash

  • Borrow using the equipment you purchase as security
  • No deposit required 
  • No monthly fees

2. Take advantage of low interest rates

More about these rates

3. Benefit from flexibility

  • Payments can be structured to your business’ cash flow
  • You can lower repayments by structuring a balloon/residual payment at the end of a 2-5 year payment period
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Finance options

Equipment loan (chattel mortgage)

Our most popular finance option. You own the equipment and pay it off over time.

Go to Equipment loan

Hire purchase

You hire the equipment from the Bank while you pay it off.

Go to Hire purchase

Who can apply for finance?

You can apply if your business has: 

  • Traded for more than 12 months
  • A good credit rating 
  • Not undergone or undergoing bankruptcy
  • Other existing accounts in good standing with the Bank

To apply, you'll need to be:

  • Financing equipment that will be used by a business
  • An individual, sole trader, sole owner of your company or someone authorised to apply for finance and credit for a business
  • Aged 18 years or over
  • Eligible to work in Australia

Apply in four easy steps

Our Equipment Finance team can talk to you over the phone, online or meet you in person at a time that suits you.

1

Get a quote online

We’ll give you a breakdown of the costs and interest. We'll need to know:

  • What you want to finance
  • How old it is
  • The finance amount

2

Simple application

Eligible CommBank customers can receive a conditional credit decision4 online (otherwise we'll call you to process your application).

3

Sign your documents online

When your application is approved you can sign your finance agreement online, using our SmartSign paperless technology.

4

Get funding within four hours of signing

Leave the rest with us and we’ll transfer the money to your supplier within four hours of you signing your agreement online.

Things you should know

This information is current as at 27 January 2021, and is for general information purposes only. It has been prepared without considering your objectives, financial or tax situation or needs. You should consider the appropriateness of this information to your circumstances before acting on it.

Credit provided by the Commonwealth Bank of Australia. These products are only available to approved business customers and for business purposes only. Applications for finance are subject to the Bank's eligibility and suitability criteria and normal credit approval processes. Individuals should view our current Terms and Conditions for Asset Finance and consider them before making any decision about these products. Rates are subject to change.  

1Source: budget.gov.au/2020-21/content/overview.htm

2Tax law is subject to change. For the latest information, please check the ATO website. Commonwealth Bank is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax (financial) adviser.

3This is provided it is depreciable under Division 40 of the Income Tax Assessment Act 1997, is acquired and first used by the relevant dates. For more information, visit the ATO website

You can apply for conditional approval in NetBank if you’re an existing CommBank business customer who is a sole trader or the single director of a company that has been operating for at least 12 months. Fees, charges, terms, conditions and lending criteria apply.