tax
Is asset finance tax deductible?
Short answer
For a chattel mortgage, interest and depreciation on the business-use share of the asset are generally deductible, and GST on the purchase can usually be claimed on an upcoming BAS. Instant asset write-off thresholds change each financial year, so check the current threshold on ato.gov.au. This is general information, not tax advice.
Last reviewed 8 September 2026 by AssetMX.
Direct answer
The tax treatment of asset finance depends on the structure and how much the asset is used for business. Under a chattel mortgage, where your business owns the asset from settlement, interest on the loan and depreciation on the asset are generally deductible to the extent of the business-use percentage. GST on the purchase price can usually be claimed on the BAS. This is general information only: your accountant can confirm what applies to your business.
Chattel mortgage: the common structure for owned assets
With a chattel mortgage, the business owns the asset and the lender holds security over it. Because the business owns the asset:
- Interest on the finance is generally deductible to the business-use percentage.
- Depreciation on the asset is generally deductible to the business-use percentage.
- GST on the purchase price can usually be claimed upfront on the BAS if you report on a cash basis, or on the next BAS if you report on an accruals basis, provided you are registered for GST.
Instant asset write-off
Instant asset write-off thresholds and eligibility change each financial year. Rather than quoting a figure that may be out of date, check the current threshold and eligibility criteria on ato.gov.au before you commit to a purchase.
Leases are treated differently
A finance lease or operating lease is generally treated differently for tax purposes to a chattel mortgage, typically as a rental or lease expense rather than interest and depreciation. See chattel mortgage vs finance lease to compare the structures. If the asset is an eligible electric vehicle, there may also be fringe benefits tax implications: see electric vehicle FBT exemption for business.
Where to next
Compare structures before you apply on how we compare, or read how asset finance works for the full process.
This is general information only and does not take your circumstances into account. It is not financial, tax or legal advice. Speak to your accountant or tax adviser about your specific situation.
Sources
Related questions
Can I claim GST back on a financed asset?
Under a chattel mortgage, GST on the purchase can usually be claimed upfront on the BAS if you report on a cash basis, or on the next BAS if you report on an accruals basis, provided you are GST registered.
Does a finance lease get the same tax treatment as a chattel mortgage?
No. Treatment differs by structure. A chattel mortgage generally allows interest and depreciation deductions to the business, while a finance lease or operating lease is typically treated as a rental expense. Speak to your accountant about which applies to you.
Do I need full financials to claim these deductions?
No. Tax treatment of the finance is separate from the low-doc application process. Low-doc asset finance does not require tax returns or full financials at application, but your usual tax reporting still applies.
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