Chattel Finance and Loss Carry Back Before 30 June
Chattel Mortgage and Loss Carry Back | Switchboard Finance
Manufacturing
Chattel Mortgage · Instant Asset Write-Off · Loss Carry Back
Chattel Finance and Loss Carry Back Before 30 June
For a manufacturer eyeing new plant before EOFY, a chattel mortgage and the instant asset write-off are this year's levers, while loss carry back is a reintroduced measure that lands in a future year. Here is how each one fits, and where each one stalls.
Quick Answer
A chattel mortgage lets a manufacturer finance new plant while owning the asset from settlement, and the instant asset write-off shapes the deduction this financial year. Loss carry back is a reintroduced measure that applies to a future loss year, so treat it as forward planning.
How chattel finance and the write-off work together
A chattel mortgage lets you finance new equipment while holding title from settlement, which is what keeps the depreciation and any instant asset write-off on your side of the deal rather than the financier's. The lender advances the funds, the asset stands as security, and you repay over an agreed term. It is the most common structure manufacturers use for plant and machinery.
Two features matter for a manufacturer at this time of year. The GST credit on the purchase is generally claimed upfront on your next activity statement (indicative, confirm with your accountant), and an optional balloon payment can lower the monthly repayment by parking a lump sum at the end of the term. That ownership-from-day-one structure is the reason a chattel mortgage pairs cleanly with the EOFY deduction levers, where a rental or operating lease would not.
The write-off threshold, and where it bites for plant
The instant asset write-off lets an eligible small business immediately deduct the full cost of an asset that sits under the threshold, but most factory plant sits above it and pools instead. The current $20,000 threshold applies to eligible assets first used or installed ready for use by 30 June 2026, for businesses with turnover under $10 million, per the Australian Taxation Office.
A measure to make the $20,000 write-off permanent from 1 July 2026 has been announced in the 2026-27 Federal Budget but is not yet law, so for this EOFY the current rules are what you plan around. Assets of $20,000 or more do not vanish from your deductions; they drop into the small business pool and depreciate at an indicative 15 percent in the first year then 30 percent after that (this varies, confirm with your accountant). For a press brake or a CNC machine, that usually means the write-off is a timing strategy, not a one-hit deduction.
Loss carry back, the lever most manufacturers miss
Loss carry back lets an eligible company offset a tax loss against tax it paid in the prior two years and receive that earlier tax back as a refund, limited by the company's franking account balance and to revenue losses only. It applies to companies only, not trusts or sole traders. The measure was reintroduced in the 2026-27 Federal Budget, and it is not yet law.
The timing is the part to get right, because it does not help this EOFY. As announced, loss carry back applies to income years starting on or after 1 July 2026, so the first loss year it can reach is the 2026-27 year that ends on 30 June 2027. A loss created by plant you install before 30 June 2026 falls in the current year, which the measure does not reach, and the earlier loss carry back scheme has ended. Treat it as a forward-year lever to plan for, not a refund you claim on this year's purchase. Where it does land, a manufacturer that paid tax in a strong prior year and later books a loss could free up cash that covers the deposit or balloon on the next asset, or sits as working capital; some route it through a business loan or low doc asset finance facility to keep the equipment line separate.
Putting the numbers together before 30 June
Before 30 June, the real question is whether the deduction and the upfront GST credit land in the year you actually need them. The rough sequence is simple: price the asset, confirm it can be first used or installed ready for use by 30 June (illustrative timing matters here), then check with your accountant how the deduction interacts with your expected profit or loss for the year. Loss carry back sits outside this EOFY decision, because it would only apply to a loss in a later year. The finance and the tax timing are two separate decisions that happen to share a deadline.
Where it works
- Asset is ordered and first used or installed by 30 June (illustrative timing)
- Business turnover sits under the $10 million threshold
- Equipment financed on a chattel mortgage and owned from settlement
- A profitable prior year on record, which matters later if loss carry back is used in a future loss year
Where it stalls
- Asset will not be installed until July, so the deduction slips a year
- The entity is a trust or sole trader, so company loss carry back does not apply
- Expecting loss carry back to refund a loss created this EOFY, which it cannot reach
- Plant sits above the threshold and was expected to be a one-hit write-off
For a manufacturer, a chattel mortgage and the instant asset write-off are the two levers that move on this EOFY equipment purchase, while loss carry back is a reintroduced, not-yet-law measure that would only apply to a loss in a later year. The write-off is mostly a pooling and timing question for plant above the threshold. None of it is automatic, and the right move depends on your structure and your numbers.
Key takeaway: price the asset, confirm it can be first used or installed by 30 June, and have your accountant model the deduction this year, treating loss carry back as a future-year lever.Frequently Asked Questions
Writing off equipment worth $20,000 or more in a single year is generally not available under the instant asset write-off, because the current threshold applies to assets that sit under $20,000. Plant above that figure instead enters the small business pool and depreciates over time at an indicative rate, so for most factory machinery the write-off is a timing strategy rather than an immediate full deduction. Your accountant confirms how it applies to your business.
Yes, buying equipment with a chattel mortgage does not stop you claiming the instant asset write-off, because you own the asset from settlement rather than renting it. Eligibility still depends on the asset cost, your turnover and the asset being first used or installed ready for use in time. The finance structure and the tax treatment are separate questions, so confirm both with your accountant and your broker.
Loss carry back lets an eligible company offset a tax loss against tax it paid in the prior two years and claim that tax back as a refund. It applies to companies only, not sole traders or trusts, and is limited by the franking account balance and to revenue losses. It was reintroduced in the 2026-27 Federal Budget and is not yet law. As announced it applies to income years starting on or after 1 July 2026, so the first loss year it can reach is the 2026-27 year ending 30 June 2027, not a loss created this EOFY. For the finance side, a chattel mortgage or low doc asset finance facility funds the equipment regardless of the tax timing.
On a chattel mortgage, the GST credit on the purchase price is generally claimed upfront on your next business activity statement rather than spread across the term, because you are treated as the owner from settlement. This is one reason manufacturers favour the structure for plant and vehicles. The exact timing depends on your GST reporting cycle, so confirm it with your accountant.
Whether to buy equipment before or after 30 June depends on where your profit lands this year and whether the asset can be first used or installed ready for use in time. Buying before EOFY brings the deduction and any GST credit into the current year, which helps if you are profitable now, while deferring can make sense if next year looks stronger. Our chattel mortgage guide walks through the trade-off in more detail.
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