Buying equipment? Bring your accountant in before you sign

A new excavator, a refrigerated van, a CNC machine, a commercial oven, a fit-out for the second shop. Equipment purchases are exciting, often overdue, and usually negotiated directly between the owner and a dealer. Too often, the accountant only finds out when the invoice turns up in the tax-time paperwork — by which point the best decisions about timing, structure and funding have already been made, sometimes badly.

This guide makes the case for bringing your accountant in before you sign, sets out the questions to ask, and explains how lenders look at equipment-related finance.

Why your accountant should see the quote first

An equipment purchase touches three things your accountant manages:

1. Tax — when and how the purchase is deducted, and whether any small business concessions apply
2. Cash flow — what paying for it does to working capital over the coming months
3. Structure — which entity should own the asset, and how it should be financed

Get any one of those wrong and the “right” equipment can still be a costly purchase. A short conversation before signing usually costs far less than fixing it afterwards.

Question 1: How does this affect my tax?

Depreciation rules decide how quickly the cost of an asset reduces taxable income. For small businesses using simplified depreciation, the instant asset write-off can allow an immediate deduction for eligible assets under a threshold.

The ATO confirmed that for 2025–26, businesses with aggregated annual turnover of less than $10 million could immediately deduct the business portion of eligible assets costing less than $20,000 each, where the asset was first used or installed ready for use between 1 July 2025 and 30 June 2026. The threshold applies per asset, and covers new and second-hand assets, with some exclusions.

What applies to purchases after 30 June 2026 depends on the rules in place for that year, so ask your accountant to confirm the position for your expected installation date. Don’t buy an asset purely for a tax deduction — a deduction reduces tax on money you’ve spent; it doesn’t make the purchase free.

Ask your accountant:

• Which depreciation approach applies to this asset?
• Does timing matter — should installation happen before or after a particular date?
• Is GST claimable, and when will the credit come through on the BAS?
• Which entity should own the asset?

Question 2: What does paying cash do to working capital?

Business.gov.au defines working capital as the cash available for day-to-day expenses. Paying cash for a long-lived asset swaps that flexible cash for something you can’t spend on wages, stock or a tax bill.

Ask your bookkeeper or accountant to show the 13-week cash forecast twice: once with the purchase paid in cash, once financed. If the cash version produces a dangerous low point — before payroll, at BAS time, or in a seasonal trough — finance is probably the safer choice, even if it costs more in total.

Question 3: What finance structure suits the asset?

The principle is to match the term of the finance to the life of the asset. A machine expected to work for eight years shouldn’t be funded with a facility you need to repay in six months; a short-term need shouldn’t be locked into a seven-year loan.

Asset or purpose	Typical useful life	Finance that usually fits
Vehicles and trucks	Medium	Term loan or asset-based finance
Production machinery	Medium to long	Term loan matched to asset life
Fit-out of premises	Tied to the lease	Term loan; property-secured if larger
Small tools and IT	Short	Line of credit or cash
Specialised or second-hand equipment	Varies	Term loan; property security can help where the asset is hard to value

Business.gov.au lists equipment leases and asset financing among the products banks and other lenders offer. Loans, leases and hire purchase are treated differently for tax and GST, so ask your accountant which suits your situation before choosing.

Without property, a trading business can usually look at amounts somewhere between $5k and $500k, with the lender working from turnover and recent banking. With property, the range widens to $20k–$5m, which can suit larger purchases or specialised equipment that’s difficult for a lender to take as security.

How lenders look at equipment-related finance

A lender considering finance linked to an equipment purchase will usually want:

• The quote or contract — what’s being bought, from whom, for how much
• Recent trading — bank statements, BAS and a year-to-date P&L
• How the asset earns — more capacity, lower costs, a new contract
• Existing commitments — current loans, leases and any ATO arrangement
• For larger amounts — financials and possibly property security

A clear one-page explanation of why the equipment is needed and how it pays for itself — ideally reviewed by your accountant — makes assessment faster. Our page on how profit links to servicing explains how lenders test whether repayments are affordable.

An illustrative example

A hypothetical earthmoving contractor is offered a second-hand excavator for $185,000 to take on a council drainage contract. The owner nearly pays from the business account, which holds about $220,000. The accountant’s forecast shows that doing so would leave the account short at the next BAS and during the contract’s first 60 days, before the first progress claim is paid.

Instead, the owner finances most of the excavator over a term matched to its expected working life, keeping the cash buffer intact. The accountant confirms how depreciation will apply given the asset’s cost and installation date, and that GST on the purchase will be claimed on the next BAS. The contract starts with the account comfortable rather than stretched. The figures are illustrative.

Common mistakes with equipment purchases

• Signing before checking the cash forecast. The deposit and first repayments often land in the same month as a BAS or a quiet trading period.
• Buying in the wrong entity. If the trading company uses the asset but the family trust buys it, your accountant may need to set up a lease or other arrangement between them.
• Forgetting the extras. Delivery, installation, training, insurance, registration and maintenance can add meaningfully to the true cost.
• Using a short-term facility for a long-term asset. Repaying a machine over months when it will work for years squeezes cash unnecessarily.
• Assuming the write-off applies. Thresholds, dates and eligibility rules matter; confirm before you rely on a deduction.
• Ignoring the trade-in. A trade-in reduces the amount you need, but its value should be in writing before you commit.

A pre-signing checklist

Before you sign the quote:

• Send the quote to your accountant with the expected delivery and installation date
• Ask how depreciation, any write-off and GST will apply
• Ask your bookkeeper to show the cash forecast with and without the purchase
• Confirm which entity should own the asset
• Decide how to fund it — cash, finance or a mix
• If financing, gather recent bank statements, BAS and the year-to-date P&L
• Confirm delivery, installation and any trade-in values in writing

Our Link-up checklist builder can produce a tailored document list for an equipment purchase, split into what you provide and what your adviser provides.

When the business coach is pushing the purchase

If the purchase is part of a growth plan from your business coach, the same rules apply — perhaps more so. Growth plans often bundle several costs together: the equipment, an operator, a vehicle to move it, extra insurance. Our page on funding a coach’s growth plan explains how to map them.

Buy the equipment, keep the buffer

If your accountant agrees the purchase makes sense and the forecast shows financing is the safer path, the next step is quick. Make a 60-second enquiry and tell us what you’re buying and roughly what it costs. We don’t do a credit check when you enquire, your file is linked to one suitable lender instead of being passed around, and a real person calls you to go through it — your accountant can be part of the conversation if you’d like. Please share accurate figures, including the quote amount and any property, so we can match you correctly from the outset. Check your equipment funding options.