Is equipment finance tax deductible?

A plain-English starting point on a question that genuinely depends on the structure chosen and the business's own circumstances.

The honest short answer: it depends on the structure

This is one of the most common questions business owners ask before financing equipment, and the honest answer is that it depends heavily on which finance structure is used, and on the business's own tax position. There isn't a single universal answer that applies to chattel mortgage, hire purchase and operating lease equally.

Broadly speaking, different structures tend to affect tax in different ways — through depreciation claims on an owned asset, through deductible interest components, or through lease payments treated as a business expense. Which of these applies, and to what extent, depends on the structure chosen and current tax rules.

Worth knowing: This page is intentionally general, and deliberately avoids stating specific deduction amounts, rates or eligibility rules, because those depend on individual circumstances and change with tax law. Speaking with an accountant before financing equipment — not after — is the only reliable way to understand the tax outcome for a specific business.

Why this is worth sorting out before signing, not after

The finance structure is usually locked in once an agreement is signed. If the tax treatment matters to a business — and for most businesses, it does — it's worth having that conversation with an accountant before choosing a structure, rather than working backwards from a decision that's already been made.

Questions worth bringing to an accountant

Useful starting questions include how the asset would be depreciated under each structure being considered, whether the business's current tax position changes which structure makes more sense this financial year versus another, and whether the equipment's expected useful life lines up with the term being offered.

Enquire about this platform