Why the Instant Asset Write Off Does Not Apply to a Lease
Last updated: September 2026
The instant asset write off applies to depreciating assets a business buys and owns.
An operating lease is not a purchase, so the write off does not apply to it.
Lease payments are generally deductible as they are incurred instead.
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Quick formA short definition of the write off
It lets an eligible small business claim an immediate deduction for the cost of a depreciating asset, rather than spreading it across the asset’s effective life.
The Australian Taxation Office set the threshold at $20,000 for assets costing less than that figure. It applied to assets first used or installed ready for use between 1 July 2025 and 30 June 2026, for small businesses with aggregated turnover under $10 million.
That window has closed. A further threshold for 2026 to 2027 was announced in the May 2026 Budget and is not yet law. Confirm the figure that applies to your own year at ato.gov.au or with your accountant before relying on it.
The essential point is unchanged by whatever the figure becomes: it is a rule about buying assets.
A lease sits outside it
On an operating lease the financier owns the equipment. You are paying for the use of it, not acquiring it.
Because there is no asset on your books to write off, there is nothing for the write off to apply to.
The deduction still exists, it just takes a different shape: the payments are generally deductible as they are incurred across the term.
A chattel mortgage is different again, because there you own the asset from the start and the financier holds security over it. Ask your accountant which structure you are actually being offered.
Often the better outcome anyway
A write off gives a large deduction once, in the year of purchase, and needs the capital to buy the asset in the first place.
A lease spreads a smaller deduction across every year of the term, and needs no capital outlay at the start.
For a business managing cash rather than managing a tax position, the second shape is frequently the more useful one.
The deduction is not lost. It is spread.
This page is general information about how these arrangements are commonly treated in Australia. It is not tax advice. Your structure, your finance arrangement and the year all change the answer, so confirm your own position with your accountant.
Common questions
Can I claim the instant asset write off on a leased printer?
Not on an operating lease.
The write off applies to depreciating assets a business buys and owns, and on a lease the financier owns the equipment.
The lease payments are generally deductible as they are incurred instead.
What is the current instant asset write off threshold?
The Australian Taxation Office set it at $20,000 for assets first used or installed ready for use between 1 July 2025 and 30 June 2026.
That applied to small businesses under $10 million aggregated turnover.
That window has closed, so check ato.gov.au for the figure that applies to your own year.
Does a chattel mortgage qualify for the write off?
It can, because under a chattel mortgage you own the asset from the start and the financier holds security over it.
Eligibility still depends on the threshold, your turnover and the year, so confirm the position with your accountant.
Am I worse off tax wise by leasing?
Not necessarily.
A write off gives one large deduction in the year of purchase and needs the capital to buy.
A lease spreads a smaller deduction across the term with no capital outlay.
Which suits you depends on your cash position and your tax position.