Fitout Finance in Australia: Costs, Security and Tax Treatment
Guides
Fitout finance · Commercial leases · Staged invoices · Division 43 and 40
A commercial fitout is not one finance product. The right structure depends on the lease, landlord contribution, remaining lease term, builder payment schedule, business history, opening cash requirement and what happens when the lease ends. This guide follows the decision from site and lease through funding, build, opening and exit.
Quick Answer
Commercial fitout finance in Australia is not one loan. Before signing a lease, line up the landlord contribution, remaining lease term, builder payment dates and the cash the business still needs to open. The completed project is then split asset by asset between capital works and depreciating plant for tax.
Also called fit out finance, shop fitout finance, or commercial fitout finance.
How can you finance a commercial fitout in Australia?
A commercial fitout can be financed in several ways, and the cheapest-looking structure is not always the one that fits the build. The main decision is what is being funded: removable equipment, permanent building works, soft costs, a timing gap, or all of them at once.
| Structure | Usually suits | Main limitation to check |
|---|---|---|
| Specialist staged fitout facility | Mixed builder works, equipment and approved soft costs paid across a build | Eligibility, eligible costs, draw window and security vary by facility |
| Equipment or asset finance | Identifiable movable plant such as kitchen, clinical, gym, IT or point of sale equipment | Permanent building works and some soft costs may sit outside the asset facility |
| Business loan or line of credit | Deposits, variations, professional fees and opening cash gaps that do not attach neatly to an asset | Repayment starts and total cost need to fit the business cashflow, not only the build budget |
| Property-backed business finance | Larger projects where the business owner has usable real property equity and accepts property security | Valuation, documentation and property risk can make it slower and structurally different from fitout-only finance |
| Blended structure | Projects where equipment, permanent works and opening capital have different funding characteristics | Each facility has its own settlement date, security and repayment schedule, so the pieces must be mapped together |
Practitioner framework based on the common structures used for Australian commercial fitouts. It is not a lender policy or recommendation. The right structure depends on the project, business, lease, security and current lender policy.
A landlord contribution is not another loan structure. It reduces what the tenant ultimately pays, but the builder may need payment weeks or months before the contribution is released. That timing difference is why the landlord incentive and the finance should be mapped together rather than netted off on paper.
What should you work out before signing the lease?
Before signing a commercial lease, work out the full cost of getting from handover to revenue, who pays each line, when each payment falls due, and what the lease requires at the end. The finance application is easier when those decisions are settled before rent starts and before the builder is booked.
| Question | Why it matters to the finance | Who should settle it |
|---|---|---|
| What condition is the premises handed over in? | A bare shell, serviced shell and existing fitout produce very different builder scopes | Landlord, builder and your adviser from the lease and site inspection |
| What is the landlord paying for? | A fitout contribution, rent-free period and landlord works reduce different costs and arrive at different times | Solicitor and landlord before the lease is signed |
| When do rent and outgoings start? | Rent can fall due while the premises is still a building site and before the business earns revenue | Solicitor and accountant |
| Are council, landlord or building approvals needed? | Approval delays can move the builder program beyond the finance draw window and opening date | Council, certifier, landlord and solicitor as applicable |
| What is the make good obligation? | A fitout can create a future removal or reinstatement cost from the day it is installed | Solicitor from the lease wording |
| How much cash is needed after the builder is paid? | Stock, wages, insurance, rent, marketing and delayed revenue are opening costs, not automatically fitout costs | Business owner and accountant from the opening cashflow forecast |
The NSW Small Business Commissioner makes the practical point directly for retail leasing: fitout responsibilities and preparation costs should be negotiated and agreed in writing before the lease is signed, and a rent-free period may matter while the shop is not trading. The exact legal position varies by state and by lease, so use the government guidance as a checklist and have your own lease reviewed.
| Stage | What to do | Why it matters |
|---|---|---|
| 1. Site and heads of agreement | Confirm the handover condition, proposed lease term, options, incentive and target opening date | These points drive the project cost and lender view before the legal lease is final |
| 2. Early scope and quotes | Get a preliminary builder scope plus major equipment quotes | A lender cannot sensibly assess a fitout with no project number |
| 3. Conditional finance assessment | Test the business, lease position, project cost, contribution and proposed funding structure | This can expose a funding gap before the lease and builder contract are fully committed |
| 4. Lease and legal review | Settle fitout approvals, incentive timing, rent commencement, make good and any conditions you need before becoming unconditional | The finance cannot repair a lease obligation that was misunderstood |
| 5. Final scope and formal approval | Give the financier the final lease, final itemised quote and any remaining documents | Conditional interest is not the same as a facility ready to pay the builder |
| 6. Builder commitment and deposit | Only commit once the payment dates, approved limit and any finance conditions line up | The first real deadline is usually the builder deposit or progress claim, not the advertised approval time |
This is a risk-control sequence, not legal advice and not a universal lender process. Your solicitor should advise on the lease and any finance condition. Your broker should confirm what can be assessed before the lease and quote are final.
Where the question is broader than a fitout, the answer sits elsewhere in the lane. The revolving facility itself is covered in the equipment line of credit guide, used and aged assets in financing used and aged equipment, and assets coming from overseas in importing business equipment.
Can you get fitout finance pre-approved before signing the lease?
Sometimes. A broker or lender may be able to give an indicative or conditional view from the business information, heads of agreement, draft lease and preliminary quote, but that is not the same as an unconditional approval or a facility ready to pay a builder. Final lease terms, the final quote, security and any lender conditions still have to be satisfied before settlement. Use pre-assessment to test whether the project is financeable before you become fully committed, not as a substitute for a finance clause or legal advice.
Who pays for the fitout, you or the landlord?
Usually both, in proportions set by the lease. A landlord contribution, a rent free period and landlord's works all reduce what you have to fund, and none of them removes the need to pay the builder while the job is running. The real question is not whether an incentive is available, it is which combination leaves the least cash exposed at the worst moment.
Incentives arrive in more than one shape and they are not interchangeable. A cash contribution towards the works, a rent free or rent abatement period, and landlord's works carried out before you take the keys all reduce what you spend, but they land at different times and only one of them is money in your account. A contribution promised on practical completion does nothing for a progress claim in week three.
| Route | What it gets you | What it costs you |
|---|---|---|
| Cash contribution towards the works | Reduces the amount you have to fund | Usually paid on milestones or at completion, so the builder still needs paying in the meantime, and it is negotiated against the rent |
| Rent free or abatement period | Relief in the early months when revenue is thin | It is rent you do not pay rather than money you receive, so it settles no builder invoice |
| Landlord's works before handover | Base building brought closer to what you actually need | You do not control the scope or the program, and what is built is the landlord's asset |
| Fund the fitout yourself | Control of scope, program and specification, and the plant is yours | Repayments, and the whole cost sits with your business |
| A combination of the above | The usual outcome in practice | Each limb arrives at a different time, so map when each one actually lands against when the builder invoices |
What if the landlord contribution is paid after the builder invoices?
Treat the delay as a funding gap, not as proof that the project is fully funded. A contribution payable at practical completion may reduce your final net cost but still leave the business responsible for every progress claim before completion. Map the contribution conditions and expected payment date against the builder schedule, then size the finance or cash reserve to the largest gap between them. If the entitlement itself is disputed or conditional, resolve the lease issue with your solicitor rather than borrowing on the assumption that the landlord must pay on a particular date.
The fitout period matters for the same reason. Whether rent falls due while the site is still a building site, and for how long, is written into the lease, and it is one of the costs that never appears on a builder quote. Get that clause read before you sign, not after the program slips.
Retail and commercial leasing is governed state by state in Australia, and several state small business commissioners and equivalent bodies publish free guidance on leasing business premises that covers fitout obligations. Read that alongside your own lease. This page states no position under any state's retail leases legislation, and the incentive clause itself is a question for your solicitor.
Lease terms, incentives and who is responsible for fitout works are legal questions for your solicitor. How a contribution or incentive is treated for tax is a question for your accountant. The same clause usually drives both, so settle them together. General information only, not financial advice.
Can a new business or startup get fitout finance in Australia?
Yes, but the lender pool is usually smaller than it is for an established business. A startup does not automatically fail because it has less than two years of trading history. The assessment shifts toward the directors' industry experience, the lease, itemised fitout quote, business plan, opening cashflow, owner contribution and any guarantees or security available. A two-year trading rule belongs to particular facilities, not to the whole Australian fitout-finance market.
| Area | Established business | Startup or first location |
|---|---|---|
| Trading evidence | Existing turnover, account conduct and servicing history carry more weight | Forecasts, director experience and evidence behind the revenue assumptions carry more weight |
| Lease and site | Still important, especially for a relocation or second site | Usually central because the premises and opening date are part of the business case itself |
| Owner contribution | May be lower where the business has strong cashflow and asset backing | Often more important because there is less operating history to support the project |
| Security and guarantees | Can be supported by financed assets, business cashflow, guarantees or property depending on the structure | Additional guarantees, cash contribution or property support can widen the lender pool, depending on the lender |
| Funding structure | Can include specialist staged fitout facilities, equipment finance, business lending or property-backed finance | May rely more on equipment finance, specialist franchise or practice funding, secured business lending, property-backed funding or a blended structure |
If one specialist fitout facility says no because the business has not traded for two years, the next question is not simply "which lender ignores the rule?" It is which structure fits the project and what evidence can replace the missing trading history. A startup that uses all available cash on the build can still fail at opening, so keep the opening cash requirement separate from the construction number.
Startup appetite varies materially by lender, industry and security. This section describes the assessment logic, not an approval promise or a universal policy.
What can a specialist staged fitout facility cover?
The specialist staged facility described in this guide can combine eligible building works, equipment and approved soft costs under one limit. That can suit a project that is too mixed for ordinary equipment finance alone, but these are indicative terms for one specialist non-bank structure available through our broking panel, not a definition of every fitout loan in Australia.
| Element | What applies |
|---|---|
| Building works | Shopfront, partitions, ceilings, flooring, electrical and plumbing invoiced by the builder |
| Equipment and fitted plant | Joinery, kitchen or clinical equipment, furniture and point of sale hardware |
| Soft costs | Design fees, project management, council and permit costs, uncapped in this category |
| Asset age and class | No restrictions under this facility, so refurbished plant can sit beside new joinery |
| Fitout sub-limit | From $25,000, approved against the builder quote before work starts |
| Individual transactions | From $2,000 under the wider facility |
| Invoice window | 120 days, with invoices uploaded and paid as the builder issues them |
| Repayments during the window | None, with interest capitalised rather than billed |
| Term after the window | 5 years, monthly in advance, no establishment fee |
Indicative terms from a specialist non-bank fitout facility available through our broking panel as at 26 August 2026. Other lenders and structures differ. Not a quote, offer of finance or lender policy.
What fitout finance is not
Fitout finance on this page means funding the build-out or refurbishment of commercial premises you occupy. Vehicle fitouts, equipment-only purchases and paying an outgoing tenant for a fitout already installed are different finance questions even though the word "fitout" appears in all of them.
| What you mean by fitout | What it covers | Where it belongs |
|---|---|---|
| Commercial premises fitout | Building out a shop, cafe, clinic, gym or office you lease or own | This guide |
| Vehicle fitout | Service bodies, canopies, shelving, racking and toolboxes on a ute, van or truck | Asset finance. Start at the Tradie Hub |
| Equipment or furniture only | Replacing benches, chairs, refrigeration or point of sale with no building work | Ordinary equipment finance rather than a staged builder facility |
| Paying for a fitout already installed | An ingoing paid to an outgoing tenant, or a fitted site taken over with a business | A business purchase or refinance question, assessed differently from new works |
What secures this specialist facility when you do not own the building?
For the specialist facility described here, the financed assets and a continuous business bank-feed link support the facility rather than real property. Other fitout structures can use different security, including equipment-only security, guarantees or real property, so do not carry this security answer across the whole market.
From our broking, indicative
What the security position looks like in practice on this tenant-fitout facility:
| Position | What applies |
|---|---|
| Asset backed, bank feed link in place | To $500,000 |
| Applications considered to | $2,000,000, assessed on the trading account rather than on property |
| Not asset backed | Capped at $100,000 |
| Bank feed link | Held for the life of the facility, not sampled once at application |
Indicative terms from the specialist non-bank facility described in this guide as at 26 August 2026. Other lenders and structures differ. Actual terms depend on lender policy and your circumstances at application.
What do you need to qualify for this specialist facility?
This particular facility is aimed at established businesses. Its indicative criteria are two full years of trading, turnover above $250,000, clean credit conduct and a bank feed link the assessor can keep reading. Those are facility-specific criteria, not universal fitout-finance rules.
| Requirement | What is looked for |
|---|---|
| Trading history | 2+ years |
| Turnover | $250,000+ |
| Credit conduct | Clean, with no dishonours |
| Director credit score | Equifax 550 or better on 2.0 Comprehensive |
| Bank feed | Continuous link, held for the life of the facility |
| Base tier documents | Application plus 6 months of bank statements across all business accounts |
| Trust entities | Trust deed in addition to the base tier documents |
Indicative criteria for the specialist non-bank facility described in this guide as at 26 August 2026. Not a lender policy, approval, quote or offer of finance.
A worked view of that security position on leased practice premises sits in our note on financing a fitout when you lease rather than own.
How long does fitout finance approval take?
There is no single approval time across the Australian market. A clean established-business application with a final lease and itemised quote can be simpler than a startup, mixed staged facility or property-backed structure that needs a valuation. The useful deadline is the date the builder needs a deposit or first progress payment. Work backwards from that date and leave room for lender conditions, lease changes, quote revisions and document collection.
How does your remaining lease term affect fitout finance?
The finance term and the premises term need to make commercial sense together. A five-year finance product does not mean every borrower can take a five-year facility when only three years remain on the lease. Lenders can consider the remaining term, renewal options, assignment rights, asset removability and security differently, so the lease should be tested before the finance term is assumed.
| Lease position | What the finance question becomes | What to resolve before application |
|---|---|---|
| 5 years remaining and a 5-year facility requested | The terms are more naturally aligned, subject to ordinary credit and asset assessment | Confirm the lease is current and the works are permitted |
| 3 years remaining and a 5-year facility requested | The lender may shorten the finance term, place more weight on renewal rights or use a different structure | Whether an option should be exercised or documented, and what happens if it is not |
| Unexercised option | An option can improve the occupancy story, but do not assume every lender counts it as if it were already exercised | Notice dates, conditions and whether the option is actually available to you |
| Month-to-month or holdover | A large fixed fitout can be harder to justify where occupancy is uncertain | A documented occupancy path before committing major capital |
| Taking an assignment | The lender needs to understand the rights you are actually taking over and the remaining term | Assignment approval, remaining term, options, existing fitout ownership and make good |
The same issue returns at exit. If the lease ends, the business relocates or the lease is assigned while finance is still outstanding, the loan does not disappear with the occupancy right. That is why the lease term, finance term and end-of-lease plan should be considered together before a long-lived fitout is installed.
Lenders treat lease terms and options differently. Your solicitor should advise on the legal effect of the lease and option wording. This section describes the finance issue, not a universal lender rule.
How does the 120 day invoice window work on the specialist facility?
Invoices are uploaded and paid as the builder issues them across a 120 day window, and no repayments fall due while that window is open. The sub-limit is approved against the builder quote before work starts, from a minimum of $25,000.
Each approved builder invoice is paid from the limit as it is issued, so the business does not have to pay the full project cost on day one. Interest capitalises inside the window rather than being billed. When the window closes, the balance is fixed and amortisation starts monthly in advance over five years.
What the window costs, and how capitalised interest lands on the fixed balance, is covered in our note on the cafe fitout sub-limit. What happens mechanically at invoice upload and settlement is covered in our note on invoice upload and settlement.
| Stage | What happens | Repayments |
|---|---|---|
| Sub-limit set | Minimum $25,000 approved against the builder quote | None yet |
| Days 1 to 120 | Approved invoices uploaded and paid as the builder issues them | None, with interest capitalised |
| End of window | Balance fixed | Amortisation starts |
| Following 5 years | Balance amortises over the term | Monthly in advance |
Indicative terms from the specialist non-bank fitout facility described in this guide as at 26 August 2026. Other lenders use different draw and repayment structures. Not a quote, offer or lender policy.
The window should be mapped to the builder's actual program, not simply to the lease commencement date. If the build runs late, the consequences are covered under what happens when the fitout plan changes.
How much cash do you actually need from the builder quote to opening day?
Your total funding need is usually bigger than the builder quote. The builder quote prices the works. It does not automatically include the lease security, rent before opening, GST timing, opening stock, wages, insurance, marketing, variations or the cash needed while revenue ramps up. Size the project from the first deposit to stable trading, then decide which lines belong in fitout finance, another facility or cash.
The lines that fall outside the build are working capital rather than fitout costs, and they are worth arranging at the same time rather than after the doors open. The product side sits on the working capital loans page and the mechanics are covered in the working capital guide.
| Cost or timing item | Treatment under the specialist facility described here | What the business still needs to plan |
|---|---|---|
| Builder deposit and progress claims | Core fitout use, subject to the approved quote and facility conditions | Dates must line up with the approved draw window |
| Equipment and fitted plant | Can sit inside the mixed facility, or be financed separately as equipment | Separate supplier deposits and delivery dates |
| Design, project management, council and permit costs | Approved soft costs can sit inside this specialist category | Some costs fall due before the final build contract is ready |
| Landlord contribution | Reduces the eventual net project cost but is not itself a draw | A contribution paid at practical completion does not pay a progress claim in week three |
| Bond or bank guarantee | Not automatically a fitout cost | Separate cash or guarantee capacity before the lease starts |
| GST timing | Confirm the lender's invoice treatment rather than assuming | A future GST credit is not cash available to pay today's invoice |
| Rent and outgoings during the build | Normally outside the fitout works themselves | Cash can be leaving before the premises produces revenue |
| Variations and overruns | Need approval if they push the project beyond the approved sub-limit | Contingency before the work is authorised |
| Opening stock, wages, insurance and marketing | Not automatically fitout expenditure | Working capital for the opening period |
| Old-site rent and make good during a relocation | Outside the new-site build unless separately approved under another structure | A temporary period of double occupancy and exit costs |
For context only, JLL's Australia and New Zealand Fit-Out Cost Guide 2026 reports an average of AU$3,011 per square metre for a moderate-style, medium-quality Australian office fitout as at Q1 2026. That is an office benchmark, not a retail, hospitality or clinical quote and not the total funding requirement. JLL also reports that builders' works account for about 50% of the Australian office benchmark, which is another reason a single construction rate does not describe the whole cash journey.
Why do fitout costs per square metre disagree?
Because the rates are rarely measuring the same scope. A cosmetic refresh of a fitted shop, a bare-shell hospitality project and a clinical site with services and shielding can all be called a "fitout" while carrying completely different builder, services and equipment requirements. Use published rates as a sense-check only, then price the actual site from the lease handover condition and itemised scope.
GST treatment and deductibility are accounting and tax questions for your accountant. Lease security and landlord-contribution rights are lease questions for your solicitor. Facility eligibility is lender specific.
What if the fitout goes over budget, runs late or your finance plan changes?
Rebuild the funding map before signing another commitment. When the project changes, the useful question is not simply "can I borrow more?" It is what has changed, when the next cash payment is due, which costs are still eligible under the existing facility, and how much liquidity must remain for opening. Tell the broker or lender before a limit is exceeded or the draw window closes, not after the invoice or repayment has already fallen due.
| Problem | First action | Possible funding response |
|---|---|---|
| Builder variation or overrun | Price the variation and stop treating the old approved limit as the project total | Assess a limit increase, use contingency cash, defer scope or use a separate facility where appropriate |
| Build delay | Update the builder program, draw dates and expected opening date | Check whether the existing window can accommodate the new dates and plan for repayments or invoices that fall outside it |
| Landlord contribution delayed | Confirm the lease condition and realistic payment date | Fund the timing gap separately rather than assuming the contribution is already available cash |
| Invoices already paid from cash or card | Collect the invoices, proof of payment and asset details | Assess whether eligible existing assets or recent expenditure can be refinanced, rather than trying to treat an old invoice as a new progress claim |
| Repayments start before opening | Rebuild the opening cashflow using the actual first-repayment date | Protect working capital, defer non-critical spend or assess separate short-term liquidity where appropriate |
What should you do before agreeing to a variation?
A variation is a new project number. If it pushes the job above the approved sub-limit, raise it before the variation is signed and before the work is done. Early, the options can include an assessed limit increase, cash, value engineering or deferring part of the scope. Late, the business can be left with an invoice that was never inside the approved facility.
What if the build runs longer than the invoice window?
The specialist window is 120 days and a delayed build does not extend it by itself. When the window closes, the balance is fixed and amortisation starts under the facility terms whether or not the doors are open. Invoices issued after the window can also sit outside the fixed balance. Treat a program slip as a finance event as soon as the revised dates are known.
Can you refinance fitout costs you already paid yourself?
Sometimes, but the assessment changes once the money has already gone out. The financier is no longer simply paying a new builder invoice. It may need to assess whether identifiable existing assets, recent eligible expenditure or another refinance structure can be supported. Removable assets with clear invoices, ownership and resale value can have more options than labour-heavy structural works. Some asset-finance structures can refinance eligible existing assets, but this is lender and asset specific and should never be assumed before the invoices are reviewed.
What if repayments start before the business opens?
Put the first repayment into the opening cashflow as soon as the date is known. A facility can be correctly documented and still create a cash problem if the site opens late and repayments start while revenue is zero. Preserve the working-capital buffer first, then decide which discretionary fitout or launch costs can be deferred.
If the plan changes because you are selling the business, relocating or assigning the lease, go to the exit section. Outstanding finance, asset security and the lease handover have to be dealt with together.
How is a commercial fitout treated for tax in Australia?
A fitout is not one tax asset. The project first has to be split between Division 43 capital works and separately identifiable Division 40 depreciating assets. Capital works generally follow the statutory capital-works rules, while plant is depreciated under the rules that apply to the specific asset. The classification depends on what the item is and how it is installed, not on whether it appears on the same builder invoice.
| Fitout component | Common treatment | Deduction basis |
|---|---|---|
| Shopfront, partition walls, ceilings and structural floors | Division 43 | Statutory capital-works rate, commonly 2.5% or 4.0% where the rules apply |
| Joinery built in and fixed to the building | Often Division 43 | Statutory capital-works rate where classified as capital works |
| Hard-wired electrical and plumbing rough-in | Often Division 43 | Statutory capital-works rate where classified as capital works |
| Loose furniture and freestanding fittings | Division 40 | Decline in value over effective life, subject to applicable rules |
| Kitchen, coffee and clinical equipment | Division 40 | Decline in value over effective life, subject to applicable rules |
| Air conditioning plant, blinds, carpet, point of sale, IT and security hardware | Often Division 40 | Asset-specific depreciation rules |
Effective lives for the Division 40 side come from the Commissioner's determination, currently the Income Tax Assessment (Effective Life of Depreciating Assets) Determination 2025, which commenced 15 September 2025 and replaced the 2015 determination. See the ATO guidance on capital works deductions and general depreciation rules. Your accountant or quantity surveyor should set the final asset-by-asset treatment and record it in your depreciation schedule. The terms themselves are defined in capital works deduction and leasehold improvements.
Can the fitout go into the small business depreciation pool?
Not the capital-works part. The ATO lists capital works, including buildings and structural improvements, among the assets excluded from the simplified depreciation rules. Eligible Division 40 assets can be treated under the simplified depreciation rules where the business and asset satisfy the requirements, but the Division 43 component remains outside the pool.
Can you claim the instant asset write off on a fitout?
Not on Division 43 capital works, and no threshold changes that, because capital works are excluded from the simplified depreciation rules as a matter of law. On the Division 40 side the threshold does matter. The permanent $20,000 instant asset write-off from 1 July 2026 is now law for eligible small businesses with annual turnover under $10 million, applying per asset to eligible assets costing less than $20,000, per the ATO guidance page updated 27 August 2026. That can reach eligible Division 40 items inside a fitout, but the project still has to be split first and each asset tested separately.
The measure is enacted: the ATO guidance page, updated 27 August 2026, states "This measure is now law" under the Treasury Laws Amendment (Tax Reform No. 2) Act 2026. Apply the law in force on the day you claim, check the current ATO position, and have your accountant confirm how it applies to the assets and dates in your project.
The examples above are common classifications, not tax determinations. Tax treatment is asset specific. General information only, not tax or financial advice.
What happens to the fitout when the lease ends, is assigned or the business is sold?
Three things have to be dealt with separately: the lease, the finance and the tax. The lease determines what must stay, be removed or be reinstated. The financier determines what must be paid out or released if secured assets are sold or handed over. Tax then depends on whether capital works are destroyed and what happens to the depreciating assets.
| Event | Lease or sale issue | Finance issue | Tax issue |
|---|---|---|---|
| Make good destroys capital works | Lease determines whether reinstatement is required | Confirm whether any secured removable assets are affected | A balancing deduction can be available where eligible capital works are destroyed |
| Plant is removed or sold | Confirm what can legally be removed | Check payout and security-release requirements before disposal | A balancing adjustment event can occur for Division 40 assets |
| Fitout is left for the landlord or incoming tenant | Document what is being left and on what basis | Do not hand over secured assets without dealing with the financier | Treatment depends on the asset and how ownership or use ends |
| Business is sold or lease assigned | Landlord consent, assignment terms and the sale contract need to line up | Outstanding balances and security releases can affect settlement | Sale treatment is separate from the finance payout |
| Business relocates with finance still outstanding | Old-site make good and new-site lease costs can overlap | Confirm whether financed removable assets move, are sold or stay behind | Asset-by-asset treatment follows what actually happens to each item |
The ATO states that if capital works are destroyed at the end of a lease, a balancing deduction may be available in the income year in which the destruction occurs. For Division 40 plant, disposing of, ceasing to hold or ceasing to use a depreciating asset can cause a balancing adjustment event. See the ATO's capital works guidance and general depreciation rules.
The same lease wording matters again if you ever buy the premises from your landlord, because the fitout you installed as a tenant becomes part of a building you own.
Do not leave the finance discussion until settlement day. If a buyer is taking the business, an assignee is taking the lease or the landlord is keeping installed assets, the payout and security position should be known before the sale or assignment becomes unconditional.
Make good, assignment and landlord rights are legal questions for your solicitor. Tax treatment is for your accountant. Finance payout and security release are lender specific. General information only.
What changes for retail, hospitality, office, clinic and franchise fitouts?
The finance principles are similar, but the asset mix, lease conditions, startup risk, approvals and opening-cash requirement can be very different. Do not assume a cafe, office, clinic and franchise all fit the same lender or facility simply because they all have a builder quote.
| Fitout type | Typical pressure point | What that changes in the finance plan |
|---|---|---|
| Retail shop | Shopfront, joinery, signage, stock and landlord incentive timing | The build and opening stock should be budgeted separately, and contribution timing mapped to progress claims |
| Hospitality or cafe | High equipment spend plus services, exhaust, refrigeration and opening stock | A blended equipment and fitout structure can be more useful than treating the whole project as building work |
| Office | Partitions, services, technology, furniture and landlord-provided base building | The starting condition and landlord works can move the project number more than floor area alone |
| Clinic, dental or medical practice | Clinical services, plumbing, shielding, rooms and specialist equipment | Equipment can be financed on a different cycle from the leasehold works, and practice-specific lenders may be relevant |
| Franchise | Franchisor specification, nominated suppliers and fixed opening timetable | There can be less ability to value engineer the scope, so approval and opening cash need to be settled earlier |
For cafe and hospitality operators, start with the Cafe Hub. For medical, dental and vet practice owners, the broader practice and premises questions sit in the practice finance guide and Whitecoat Hub. Clinic-specific approval traps are covered in our clinic fitout finance mistakes note.
Worked views by vertical sit alongside this guide. Cafe finance sits in the Cafe Hub with a worked example in our cafe fitout financing note, and the medical and dental specifics sit in our medical fitout finance note alongside the practice finance guide.
Which industries does this specialist category not fund?
The specialist category described here does not fund property development, mining exploration or mining services, or primary agriculture. A fitout inside a business of that kind is assessed as that business, not merely as a fitout. Development and mining use different structures and lenders. Primary agriculture has its own lane in the agribusiness finance guide.
| Sector | Position | Where to start instead |
|---|---|---|
| Property development | Not funded by this specialist category | A development-finance structure rather than tenant fitout finance |
| Mining exploration and mining services | Not funded by this specialist category | Sector-specific commercial finance |
| Primary agriculture | Not funded by this specialist category | Agribusiness finance guide |
The fitout decision starts before the finance application. First settle the lease, landlord contribution, remaining term, handover condition, builder scope and opening cash requirement. Then choose the structure that matches the project and the business history. If a specialist staged facility fits, map its draw window to the builder program and keep separate liquidity for costs that are not fitout expenditure. If the plan changes, rebuild the funding map before signing variations or using the last of the opening cash. Finally, classify the finished project correctly for tax and deal with any outstanding finance before a later sale, assignment, relocation or make good.
Key takeaway: finance the journey from lease to opening and exit, not just the builder quote.Frequently asked questions
Yes, but the lender pool can be smaller than it is for an established business. A startup is assessed more heavily on the lease, itemised builder quote, owner contribution, director industry experience, business plan, opening cashflow and any guarantees or security. Do not treat a two-year trading rule on one specialist facility as a rule for the whole Australian market.
Using the indicative 11.95% to 16.95% p.a. rate band and a five-year term with payments monthly in advance, $50,000 works out at approximately $1,100 to $1,224 per month once amortisation starts. That is an illustrative calculation for the specialist facility described here and excludes any different fees, draw timing or capitalised interest that may apply to an actual facility. The exact repayment comes from the lender quote.
Usually over time rather than as one immediate deduction. The project is first split between Division 43 capital works and Division 40 depreciating assets. Capital works follow the statutory capital-works rules, while eligible plant is treated under the depreciation rules that apply to the asset. Your accountant sets the final treatment.
It depends on the structure. For the specialist established-business facility described here, the indicative criteria are 2+ years trading, $250,000+ turnover, clean credit conduct, an Equifax 550+ director score and a continuous bank feed, plus the required documents. Other fitout lenders have different rules, including startup, franchise, practice and property-backed pathways.
For the specialist facility described here, the fitout sub-limit starts at $25,000 and the wider facility can fund individual transactions from $2,000. Those are indicative minimums for this facility as at 26 August 2026, not market-wide minimums and not an offer of finance.
Yes. A tenant can finance a commercial fitout even though it does not own the building. The security depends on the structure. For the specialist facility described here, financed assets and a continuous business bank feed support the facility rather than real property. Other lenders can use guarantees or property security.
The finance term and lease term need to make commercial sense together. A five-year finance product does not mean every borrower can take five years when only three years remain on the lease. Lenders can treat renewal options, month-to-month occupation, assignments and removable assets differently, so test the lease position before assuming the finance term.
Split the project first. Capital works are generally treated under Division 43, while separately identifiable plant and equipment can fall under Division 40. The classification depends on the asset and installation, not on whether everything appears on one builder invoice. Your accountant or quantity surveyor should set the final asset-by-asset schedule.
The lease, finance and tax all need separate treatment. The lease determines what must stay, be removed or be reinstated. Outstanding finance and security over removable assets must be dealt with before assets are sold or handed over. For tax, destroyed capital works can have a balancing-deduction outcome and Division 40 assets can trigger a balancing adjustment event. See the end-of-lease section.
There is no single shop-fitout average that applies across retail, hospitality, clinics and offices. For context only, JLL reports AU$3,011 per square metre for a moderate-style, medium-quality Australian office fitout as at Q1 2026. That is an office benchmark, not a shop quote. The real funding need also includes costs between the builder quote and opening day.
Sometimes, in part, and it depends on the lease. A cash contribution, rent-free period and landlord works reduce different costs and arrive at different times. A contribution paid at practical completion can reduce the eventual net cost but still do nothing for a builder progress claim due earlier. Map the incentive timing against the builder schedule.
Treat a variation as a new project number. If it pushes the job above the approved limit, raise it before the variation is signed and before the work is done. Early options can include an assessed limit increase, contingency cash, value engineering or deferring scope. See what to do when the finance plan changes.
Sometimes, but the assessment changes once the invoice has already been paid. The question becomes whether identifiable existing assets, recent eligible expenditure or another refinance structure can be supported. Removable assets with clear invoices, ownership and resale value can have more options than labour-heavy structural works. Take the invoices and proof of payment to the broker rather than assuming either answer.
No. A service body, canopy, shelving or toolbox fitout on a vehicle is an asset-finance question and does not use the same builder-progress structure as a commercial-premises fitout. This guide covers the build-out of commercial premises. For vehicle and trade assets, start at the Tradie Hub.
Sometimes you can get an indicative or conditional assessment before the final lease is signed, using the business information, heads of agreement or draft lease and preliminary fitout quote. That is not the same as unconditional approval or a facility ready to pay the builder. Use the early assessment to test the project before becoming fully committed, while your solicitor advises on the lease and any finance condition.
JLL's Australia and New Zealand Fit-Out Cost Guide 2026 reports an average of AU$3,011 per square metre for a moderate-style, medium-quality Australian office fitout as at Q1 2026. It is an office benchmark, not a universal retail, hospitality or clinical rate and not the total project funding requirement.
More than the builder quote alone. A retail opening can also require lease security, rent and outgoings during the fitout, opening stock, wages, insurance, marketing, variations and a working-capital buffer. Budget the build and opening liquidity separately, then use the quote-to-opening funding map to decide what belongs in finance and what needs cash.
Start with the lease and base-building condition, then get the design, approvals and itemised quotes moving. Test the finance before becoming fully committed, settle the final lease and scope, obtain formal approval, and only then line the builder deposit and progress claims up with the facility. Keep opening stock, wages and other working capital separate from the build budget.
Usually both are considered together. A landlord contribution reduces the eventual net project cost but may be paid only at milestones or practical completion. A rent-free period reduces rent rather than paying the builder. Negotiate the incentive for its real value, then fund any timing gap between the builder invoices and when the landlord benefit actually arrives.
Yes, but there is no single franchise-fitout structure. The franchisor can set the specification, suppliers and opening timetable, while the lender assesses the business history, franchise system, owner contribution, lease, equipment mix and available security. Some startups can use specialist franchise or secured pathways, while established franchisees can have a wider lender pool.
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