How Equipment Finance Works in Australia
Equipment finance lets businesses acquire machinery, tools, and technology without paying the full cost upfront. A lender funds the purchase and you repay in regular instalments over an agreed term — typically 2 to 7 years depending on the asset's useful life.
The equipment itself serves as security for the finance, which means you don't need to put up property or other collateral. This makes equipment finance one of the most accessible forms of business lending in Australia.
Equipment Types We Cover
- Manufacturing: CNC machines, lathes, milling machines, 3D printers, injection moulding equipment
- Warehousing: Forklifts, pallet jacks, conveyor systems, racking solutions
- Hospitality: Commercial ovens, coolrooms, coffee machines, fit-out equipment
- Medical: Dental chairs, imaging equipment, CPAP machines, surgical instruments
- Printing: Offset presses, digital printers, large-format printers, binding equipment
- Technology: Servers, networking hardware, point-of-sale systems
- Workshop: Compressors, welders, hoists, spray booths, panel beaters' equipment
Find the Right Structure for Your Equipment
Our free calculator compares chattel mortgage, finance lease, and operating lease — with tax estimates.
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Finance Structures for Equipment
The right structure depends on whether you want to own the equipment, your GST registration, and your cash-flow priorities.
| Feature | Chattel Mortgage | Finance Lease | Operating Lease |
|---|
| Ownership | Immediate | At end of term | Return to lessor |
| GST | Claim upfront | Claim monthly | Claim monthly |
| Depreciation | Yes (owner) | No | No |
| Interest Deductible | Yes | N/A (rental) | N/A (rental) |
| Balloon / Residual | Optional | Mandatory | Built-in |
| Best For | Long-life equipment you'll keep | Medium-term fleet/workshop | Technology that depreciates fast |
Chattel Mortgage
Ideal for equipment you'll use for many years. You own it from day one, claim the GST upfront, and deduct both interest and depreciation. Popular with manufacturers, workshops, and medical practices.
Finance Lease
The financier owns the equipment during the term and leases it to you. Each payment is tax-deductible. At the end, pay the residual to purchase outright. Works well for equipment that's upgraded periodically.
Operating Lease
A true rental — you use the equipment and hand it back at the end. No residual risk, no asset on your balance sheet. Ideal for technology or equipment with a short useful life that you'd replace within 3–4 years anyway.
Eligibility Requirements
- Active ABN — GST registration preferred but not required
- 12+ months trading history (start-up options available for certain equipment types)
- Clean credit history — no current defaults
- Proof of income — BAS returns, tax returns, or bank statements
- Quote or invoice for the equipment
Equipment under $150K from an established business often qualifies for a simplified "low doc" process. Larger purchases may require full financials.
Tax Benefits of Equipment Finance
- Instant Asset Write-Off: Eligible equipment can be fully deducted in Year 1 under the current threshold — delivering significant tax savings
- Depreciation: Under chattel mortgage, claim depreciation over the asset's effective life (varies by equipment type)
- Interest Deductions: All interest on a chattel mortgage is deductible
- GST Input Credit: Claim ~$10,900 GST on $120,000 equipment immediately
- Lease Deductions: Finance lease and operating lease payments are fully deductible as business expenses
Tax benefits depend on your individual circumstances and the current ATO rules. Always consult a qualified tax professional.
Calculate Your Equipment Tax Savings
Instant Year 1 deduction estimates for each finance structure.
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Equipment Finance FAQs
Can I finance used equipment?▼
Yes. Most lenders finance used equipment provided it's in good working order and has a reasonable remaining useful life. A valuation or detailed quote may be required.
What's the minimum finance amount?▼
Most lenders have a minimum of $10,000–$20,000 for equipment finance. For smaller purchases, a business line of credit or credit card may be more practical.
Can I bundle multiple items into one finance agreement?▼
Yes — many lenders allow you to bundle multiple pieces of equipment into a single agreement, which simplifies administration and may improve your rate.
How long does approval take?▼
Straightforward applications (established ABN, clean credit, under $150K) often receive conditional approval within 24 hours. Larger or more complex deals take 3–7 business days.
Is equipment finance available for sole traders?▼
Yes. Sole traders with an ABN can access the same structures as companies and partnerships. The finance application is assessed on your personal credit and business income.