How to Claim Equipment in Australia (2026 Guide)

Quick answer

Small businesses in Australia with aggregated turnover under $10 million deduct the business portion of each piece of equipment costing less than $20,000 in the year it is first used, under an instant asset write-off that became permanent from 1 July 2026. Equipment at $20,000 or more goes into the small business pool at 15% then 30%. Larger businesses depreciate over effective life. GST credits are claimed at the business-use percentage with a tax invoice.

Is equipment tax deductible in Australia?

Yes, through depreciation, and the small business rules make most of it immediate. Under the simplified depreciation rules, available to businesses with aggregated turnover under $10 million, you can immediately deduct the business portion of an eligible depreciating asset that costs less than $20,000 if it is first used or installed ready for use in the income year. The limit applies per asset, so several machines can each qualify in the same year.

For years this threshold had to be re-legislated annually, and it had lapsed into uncertainty each July. That ended in 2026. On 12 May 2026, in the 2026-27 Budget, the government announced the $20,000 write-off would be made permanent from 1 July 2026, and the Treasury Laws Amendment (Tax Reform No. 2) Act 2026 received Royal Assent on 26 August 2026. Businesses can now plan equipment purchases without watching the Senate.

Assets at $20,000 or more go into the small business pool. The business portion is deducted at 15% in the year the asset is added, regardless of when in the year it was bought, and at 30% of the remaining balance each year after. If the pool’s balance drops below the $20,000 threshold at the end of a year, the remaining balance is deducted in full. Opting into the simplified rules is all-or-nothing: you pool every eligible asset, not just the ones you choose.

Businesses above $10 million use the general depreciation rules: deduct the decline in value over the asset’s effective life, taken from the ATO’s annual effective life determination or self-assessed, using the prime cost or diminishing value method, at the taxable-use percentage.

How much can you claim?

Worked example: a Perth café (turnover $1.2 million, GST registered) buys a $16,500 espresso machine (GST inclusive), a $26,400 combi oven (GST inclusive), and $3,300 of furniture in the 2026-27 year, all for business use. Excluding claimable GST the costs are $15,000, $24,000, and $3,000. The espresso machine and furniture are under $20,000 and are written off immediately: $18,000. The oven is pooled: 15% in year one, a $3,600 deduction, with the remaining $20,400 attracting 30% the following year. First-year deductions total $21,600, and GST credits of $4,200 are claimed on the BAS.

Private use reduces the claim to the business portion. Equipment on a chattel mortgage or hire purchase is yours for depreciation from the start, with the interest deducted separately. Vehicles carry the car limit and FBT considerations and have their own page.

GST on equipment

A GST-registered business claims the 10% input tax credit on equipment at the business-use percentage, coded as GST on capital purchases on the BAS so the capital and non-capital labels are right. A valid tax invoice is needed for anything over $82.50. Imported equipment attracts GST at the border, claimable on the same basis. Second-hand equipment bought from an unregistered private seller carries no GST and no credit. The Australian GST and BAS guide covers capital purchase reporting.

Record-keeping requirements

Maintain a depreciation schedule or fixed asset register listing each asset, its cost excluding claimable GST, the date first used or installed ready for use, the business-use percentage, and the method applied. The first-use date is what determines the year of the write-off, so an asset bought in June but installed in July belongs to the later year. Keep invoices and the schedule for five years after the last claim relating to the asset, which for pooled assets can be well beyond five years from purchase.

How to claim, step by step

1. Confirm aggregated turnover is under $10 million and that you are using the simplified depreciation rules.
2. Work out each asset’s cost excluding claimable GST and its business-use percentage.
3. Write off each asset under $20,000 in the year it is first used or installed ready for use.
4. Add assets at $20,000 or more to the small business pool at 15%, then 30% in later years; write the pool off if it falls under $20,000 at year end.
5. Claim the GST credit on the BAS as a capital purchase with a valid tax invoice.
6. Update the asset register on disposal, because sale proceeds reduce the pool or trigger a balancing adjustment.

Common mistakes

• Measuring the $20,000 threshold on the GST-inclusive price when the GST is claimable.
• Writing off an asset bought before 30 June that was not installed ready for use until after.
• Claiming the instant asset write-off while above the $10 million turnover limit.
• Forgetting to write off a small business pool that has dropped under the threshold.
• Applying the write-off to a car without the car limit cap.

Software that helps

• Dext captures equipment invoices on arrival so the cost and date are evidenced before the ledger entry.
• ExpenseFlow reads equipment invoices with frontier vision AI, codes each line to an expense or fixed asset account using the $20,000 instant asset write-off line, explains the call under the line, lowers its confidence so a reviewer decides when the invoice does not settle it, and syncs the approved bill to Xero with the document attached, or to QuickBooks Online as a coded bill.
• Xero and MYOB both run a fixed asset register that applies the small business pool and tracks the first-use date.

FAQ

See the answered questions above for the 2026-27 threshold, pooling, GST-inclusive costs, larger businesses, and cars.