Avoid These 5 EOFY Finance Planning Mistakes

Most business owners approach the end of financial year thinking about what they need to buy, not how they'll pay for it.

The difference matters. Buying a $60,000 excavator outright in late June preserves your depreciation claim but drains working capital right when cash reserves matter most. Structuring that same purchase through a chattel mortgage means you claim the full asset value as a deduction, keep your operating account intact, and spread repayments across the income it generates.

The choice between preserving capital and accessing tax benefits shouldn't exist. With the right finance structure, you get both. But only if you plan before May runs out.

Waiting Until June to Think About Equipment Finance

If you're planning to lodge an equipment finance application in the final week of June, you've already left it too late.

Settlement timelines vary by lender and asset type, but most commercial equipment finance applications take between five and ten business days from submission to payout. That assumes your financials are current, your ABN has two years of trading history, and the supplier has stock ready to deliver. Add a weekend, a public holiday, or a missing tax return, and you're into July before the asset is yours.

Consider a builder who wants to claim a $45,000 tipper before year-end. They contact a broker on June 23rd with everything ready to go. The application is submitted same-day, approved on June 26th, but the dealer can't deliver until July 2nd because the truck needs compliance work. The finance contract is dated July, the tax deduction shifts to the following year, and the builder wears the delay.

Start finance conversations in April or early May if you want the asset working for you before June 30. Lenders don't move faster because your accountant is stressed.

Choosing Equipment Finance Based Only on Monthly Repayment Amount

A low monthly repayment sounds appealing until you realise what it actually costs.

Two finance structures can show identical monthly repayments but deliver completely different outcomes depending on balloon payments, interest rates, and GST treatment. A chattel mortgage with a 30% balloon keeps your repayments lower during the term, but you'll need to refinance or pay out that residual at the end. A hire purchase with no balloon costs more per month but means you own the asset outright once the final payment clears.

In a scenario where a café owner finances $25,000 worth of kitchen equipment, they're offered a chattel mortgage at $520 per month with a $7,500 balloon, or a hire purchase at $610 per month with no residual. They choose the chattel mortgage because the repayment fits their budget. Three years later, they don't have $7,500 available to pay out the balloon, so they refinance it over another two years. The equipment that should have been paid off is still costing them monthly, and the total interest paid is almost double what the hire purchase would have cost.

Understand what happens at the end of the term before you sign anything. The cheapest monthly repayment often isn't the cheapest way to own the asset. Your broker should show you the total cost across the life of the lease, not just what leaves your account each month.

Assuming All Lenders Treat Your Industry the Same Way

They don't.

Some lenders won't touch hospitality equipment because the failure rate is high. Others specialise in medical equipment finance and understand the income profile of a GP clinic well enough to approve applications that a mainstream bank would decline. Construction equipment finance sits somewhere in the middle, but even then, a lender comfortable with excavators might hesitate over a $150,000 crane because the resale market is narrow.

If you're self-employed and operating in a niche industry, the lender you choose matters as much as the rate they offer. A general business lender will assess your application using standard serviceability metrics that don't account for how your industry actually generates income. A specialist lender knows that a busy clinic can carry higher repayments during certain months because bulk billing income is predictable, or that a concreter buying a new truck will see immediate work because the old one is costing them jobs.

Access asset finance options from banks and lenders across Australia through a broker who knows which lenders back which industries. Applying with the wrong lender doesn't just mean a declined application. It means a credit enquiry on your file and fewer options when you reapply elsewhere.

Ignoring the GST Difference Between a Chattel Mortgage and a Lease

The way GST is treated changes how much you pay upfront and how the ATO sees your repayments.

Under a chattel mortgage, you're considered the owner of the asset from day one. That means you pay GST on the full purchase price at settlement, but you can claim that GST back in your next Business Activity Statement if you're registered. Your monthly repayments are split between principal and interest, and only the interest portion is deductible.

Under a finance lease, the lender owns the asset and you're leasing it from them. GST is included in each monthly repayment, so you claim it back progressively rather than upfront. The full repayment amount is deductible as a business expense because you're leasing, not buying. At the end of the term, you can purchase the asset for its residual value, refinance it, or hand it back.

For a transport business financing a $90,000 truck, the GST difference is significant. A chattel mortgage means finding an extra $8,181 at settlement to cover the GST component, even though they'll claim it back within weeks. A finance lease spreads that GST across the term, keeping the upfront cost lower but extending the total repayment period. If cashflow is tight in June, the lease makes sense. If you want full ownership and can cover the GST upfront, the chattel mortgage is usually the better structure.

Your accountant should be part of this conversation before you sign. The right structure depends on your cash position now and what you want to own later.

Letting Vendor Finance Make the Decision for You

Dealer finance is convenient until you realise you didn't compare it to anything else.

Most equipment suppliers offer vendor finance because it closes the sale faster. You're already at the dealership, the paperwork is handled in-house, and you drive away with the asset same-day. The application process is faster because the dealer has a direct relationship with the lender, and sometimes the rate is subsidised as part of a sales promotion.

But vendor finance locks you into one lender's terms. You won't see the rate another lender might offer, and you won't know if a chattel mortgage works better than the lease the dealer is pushing. If the dealer's preferred lender doesn't suit your business structure or credit profile, you'll either pay more or miss out entirely.

When you use a broker to arrange equipment finance or vehicle finance, you're comparing offers from multiple lenders before anything is signed. That might mean a lower interest rate, a structure that suits your tax position, or a lender that understands your industry well enough to approve an amount the dealer's lender wouldn't. It also means you're not relying on a salesperson to explain finance terms they don't fully understand.

Vendor finance works in specific situations where the rate is genuinely subsidised and the terms suit your needs. In every other case, you're better off arranging your own funding and turning up to the dealership as a cash buyer.

Overlooking How Depreciation and Finance Structure Work Together

Tax benefits exist whether you buy outright or finance, but the timing and structure of your deductions change depending on how you fund the asset.

Under a chattel mortgage or hire purchase, you own the asset and claim depreciation each year based on its effective life. For most commercial vehicles and machinery, that's 15% per year using the diminishing value method, or a shorter period if you're eligible for instant asset write-off provisions. The interest on your finance is deductible, but the principal repayments are not because you're paying down an asset you own.

Under a finance lease, you're not the owner, so you don't claim depreciation. Instead, the full lease payment is deductible as an operating expense. That can be more attractive if your business needs the deduction now rather than spread across several years, or if the asset will be replaced before the lease term ends.

A landscaper financing a $35,000 tractor through a chattel mortgage claims the depreciation each year and deducts the interest portion of each repayment. If they structure it as a lease instead, they claim the full repayment amount but lose access to any instant write-off provisions. Which structure delivers the bigger deduction depends on how long they plan to keep the tractor, what their taxable income looks like, and whether the ATO's instant write-off threshold applies to their purchase.

Your accountant should review the structure before you commit. A decision that makes sense in May might cost you thousands by the time you lodge your return in August.

Leaving equipment finance until the last minute costs more than time. It costs you control over the structure, the ability to compare lenders, and the tax benefit you were counting on.

Call one of our team or book an appointment at a time that works for you. We'll make sure the finance is sorted before June becomes a problem.

Frequently Asked Questions