Technician adjusting CNC machine tool holder

Can you claim the instant asset write off on CNC equipment?

Yes, but only under specific conditions, and most full CNC machines won’t qualify because of the relevant instant asset write-off limit, which is less than $20,000. The instant asset write off lets eligible small businesses deduct the full cost of an asset in the year it’s first used or installed ready for use, provided that asset costs less than the per-asset limit and your aggregated turnover sits under $10 million.

Before you get excited about tax season, run this checklist:

  • Confirm you’re using simplified depreciation rules and your aggregated turnover is under $10 million.
  • Check whether the specific item, not the whole project, costs less than $20,000.
  • Make sure it will be installed and ready for use, not just delivered, by the relevant deadline.

Pro Tip: A $220,000 CNC router won’t qualify for instant write off, but a $14,000 controller retrofit or tooling package purchased separately often will.

Key Takeaways

The instant asset write off rarely covers a full CNC machine, but the commissioning date, not the invoice date, decides whether any related claim succeeds.

Point Details
$20,000 is per asset Each qualifying item under $20,000 can be written off individually, but full CNC machines usually exceed it.
Installed ready for use is the trigger Delivery alone doesn’t count; commissioning, testing and sign-off determine your eligibility date.
Machines $20,000+ go into the pool Expect 15% depreciation in year one and 30% in following years, not an instant deduction.
Finance structure often matters more A chattel mortgage’s upfront GST credit and interest deduction can outweigh IAWO for expensive machines.
Anderson supports installation timing Site readiness assessments and commissioning coordination help reduce the risk of missing an EOFY deadline.

Table of Contents

Instant asset write off Australia: eligibility and the $20,000 limit explained

The rule is narrower than most CNC buyers assume. To use the $20,000 instant asset write off, your business needs aggregated turnover under $10 million and you need to be using the simplified depreciation rules. The $20,000 limit applies to assets first used or installed ready for use between 1 July 2025 and 30 June 2026.

There’s also a policy shift worth watching. The government announced on 12 May 2026 that it intends to make the $20,000 threshold permanent from 1 July 2026, but as of June 2026 that change still needed legislation to pass. Don’t bank on permanence until it’s law.

The limit works per asset, not per invoice. If you buy three separate pieces of equipment, each under $20,000, you can write off each one individually, provided the deduction is limited to the business-use portion. A few practical notes:

  • Trade-ins reduce the cost base you’re claiming against, not the sale price you negotiated.
  • Assets used partly for private purposes only let you claim the business-use percentage.
  • Some capital works and car limit exclusions still apply regardless of the asset’s cost.

What does “installed ready for use” actually mean for CNC gear?

This is where CNC purchases trip people up. The ATO’s test isn’t about when you paid the invoice or when the machine arrived on a truck. It’s about when the asset is physically used, or installed and ready for its intended purpose. Industry commentary has flagged this repeatedly as the point where last-minute EOFY purchases fall over, because complex machinery rarely goes from delivery to production in a single afternoon.

For CNC equipment specifically, “ready for use” typically depends on:

  1. Site preparation, including power supply, earthing and dust extraction connections.
  2. Foundation work or anchoring, especially for larger machining centres.
  3. Controller and software configuration matched to your production files.
  4. Test cuts and commissioning sign off from the supplier or technician.
  5. Operator training completed to a point where the machine can run a job.

Pro Tip: Book your commissioning date with the supplier the moment you place the order, not after the machine lands. A CNC sitting uncommissioned in the corner on June 30 earns you nothing.

How the instant write off applies to real CNC purchases

Most workshops fall into one of two buckets: buying accessories and upgrades, or buying a whole machine. The tax treatment is completely different.

Retrofit kits, tooling packages, controller upgrades and smaller attachments often land under $20,000 and can be claimed outright in the year they’re installed ready for use. A $15,000 rotary axis upgrade, for example, is claimed in full against that year’s income, assuming it meets the turnover and simplified depreciation tests.

Full CNC machining centres are a different story. A full five-axis machine costing significantly more than the threshold doesn’t qualify for the instant write off at all.

The gap between these two outcomes is significant. Claim $15,000 outright this year, and you’ve reduced taxable income by $15,000 immediately. Put $220,000 into the pool, and you’re only claiming $33,000 in year one. The rest trickles out over several years.

Combined purchases need careful cost allocation. If you buy a machine, tooling and installation as one package, you generally need to separate genuinely distinct assets from the core machine cost, and second-hand machines follow the same rules as new ones provided they meet the same use tests.

Chattel mortgages, leasing and other ways to fund a CNC purchase

For machines well above the $20,000 threshold, the instant write off isn’t your main lever. How you finance the purchase often matters more than the write off itself.

  1. A chattel mortgage lets you claim the GST credit upfront on your next BAS, while the interest component of your repayments remains tax deductible over the loan term.
  2. Finance leases and operating leases treat deductions differently. A finance lease usually mirrors ownership for tax purposes, while an operating lease often lets you deduct the full lease payment as an expense.
  3. For an expensive machine, the combined effect of an upfront GST credit plus ongoing interest deductions can outweigh what you’d get from pool depreciation alone.

Equipment finance specialists point out that manufacturers financing high-value CNC equipment through a chattel mortgage frequently land a better overall tax and cashflow position than businesses that wait and hope for an instant deduction that was never going to apply to a $200,000 machine in the first place.

None of this should be decided on tax grounds alone. Run the numbers with your accountant against your actual cashflow and production timeline before committing to a finance structure.

Claiming the write off: records you need to keep

An IAWO claim is only as strong as your paperwork. If the ATO ever asks questions, you’ll need to show more than a receipt.

  • Tax invoice showing the purchase price, GST component and supplier details.
  • A commissioning report or signed checklist confirming the date the machine became ready for use.
  • Photos or a test-cut log demonstrating the machine was operational.
  • Proof of payment and the installation date, which may differ from the invoice date.
  • BAS entries reflecting any GST credits claimed on the purchase.

If the machine has any private use, you need to document the business-use percentage you’re claiming, not just assume 100%. Assets that land in the small business pool because they’re at or over $20,000 don’t get an instant deduction, but their pool write-off rates still need to be tracked correctly year on year.

Pro Tip: Confirm the exact treatment with a registered tax agent before you lodge. A $200,000 mistake in a pool calculation is expensive to unwind later.

Why supplier commissioning support matters for your claim

Getting the tax treatment right starts well before your BAS is due. It starts with who installs your machine and how fast they can get it running.

Anderson has been building CNC machinery since 1972, supplying woodworking, metalworking, aerospace and automotive manufacturers across Australia. That history matters here because commissioning speed directly affects whether a machine is “ready for use” before a relevant deadline.

  • Anderson coordinates site readiness assessments before delivery, not after.
  • Installation and commissioning support is built into the purchase process, not tacked on as an afterthought.
  • Operator training is scheduled alongside commissioning, closing the gap between delivery and genuine production readiness.

Tax treatment is one input into a machine decision. Production capability, build quality and after-sales support usually matter more over the ten-year life of a CNC investment than which financial year you claimed a deduction in.

Considerations for businesses transitioning between turnover thresholds

Turnover fluctuates, and that has real consequences for which depreciation rules apply to you. Aggregated turnover is calculated by combining your business’s turnover with that of any connected or affiliated entities, not just the figure on your own profit and loss statement.

If you’re sitting close to the $10 million threshold, timing your CNC purchase matters more than usual. A business that crosses above $10 million partway through an income year loses access to simplified depreciation and, with it, the instant asset write off, for that year. This can catch growing manufacturers off guard, particularly workshops scaling up through new contracts or seasonal spikes in orders that push turnover higher than expected.

The reverse situation also happens. A business that drops back under the threshold after a slow year regains eligibility, but only from the point the turnover test is met for that income year, not retrospectively.

Because aggregated turnover looks backward across a defined test period, it’s worth reviewing your numbers with your accountant before committing to a CNC purchase near the end of a financial year. A machine bought in June under the assumption you still qualify, only to find your turnover calculation pushes you over the threshold, can turn an instant deduction into a multi-year pool write-off overnight.

If your business is expanding, factor this into procurement timing the same way you’d factor in supplier lead times. Buying six months earlier while you’re still under the threshold, rather than waiting until you’ve clearly outgrown it, can be the difference between a full deduction and a fifteen per cent first-year claim.

Considerations for businesses transitioning between turnover thresholds — overview diagram

The timeline from CNC purchase to a valid claim

Understanding the sequence of events matters as much as understanding the rules themselves. Here’s roughly how it plays out for a typical CNC purchase.

Order placement usually happens weeks or months before delivery, especially for machines built or configured to order. This is the point to lock in a commissioning date with your supplier, not an afterthought once the machine is on the truck.

Delivery is a logistics milestone, not a tax milestone. The ATO doesn’t care what date the machine arrived at your workshop. Site preparation, including power, earthing, foundations and dust extraction, typically needs to be finished before or immediately after delivery.

Commissioning and testing follow, covering controller setup, calibration, test cuts and sign off. This is the event that actually starts your clock for the income year, because it’s the point the machine becomes “installed ready for use.”

Operator training often runs alongside commissioning, and while training itself isn’t strictly the eligibility trigger, a machine nobody can safely operate is a hard sell as genuinely ready for use.

Claiming happens at tax time, when you lodge your return for the income year in which the asset was first used or installed ready for use. There’s no separate application form for the instant write off. It’s a deduction you claim through your regular tax return, supported by the records covered earlier. If your machine is commissioned in early July rather than late June, you’re claiming it in the following income year, not the one you expected.

Does the instant write off apply to second-hand CNC machines?

Buying used doesn’t automatically disqualify you. Second-hand CNC machines are eligible for the instant asset write off under the same rules as new equipment, provided the machine costs less than $20,000, you meet the turnover test, and it’s installed ready for use within the relevant date window.

In practice, this is where second-hand purchases often work in a buyer’s favour. A used three-axis mill or a retrofit-ready older machine can genuinely land under the $20,000 threshold, where an equivalent new model would sail past it. That opens the instant deduction to smaller workshops that might otherwise be stuck pooling a larger purchase.

There are extra risks worth weighing, though. Second-hand industrial equipment often needs more extensive commissioning work: recalibration, controller updates, replacement of worn components, or compliance checks that a new machine wouldn’t require. Every one of those tasks pushes out your “installed ready for use” date, and if that date slips past 30 June, you lose the claim for that income year entirely.

Technician calibrating second-hand CNC machine parts

There’s also a valuation question. The cost that counts is what you actually paid, including any refurbishment or freight costs directly tied to getting the machine operational. If you buy a used machine for $12,000 but spend another $9,000 getting it commissioned and calibrated, the total cost of the asset may tip over the $20,000 limit, moving it into the small business pool instead.

Document the condition and any pre-purchase inspection reports. If the ATO ever queries a second-hand claim, evidence that the machine required genuine commissioning work, rather than being usable off the truck, supports your installed-ready-for-use date.

How the write off interacts with other depreciation approaches

The instant asset write off doesn’t operate in isolation. It sits alongside the small business pool and, historically, alongside temporary full expensing, which applied more broadly during the pandemic period but has since been replaced by the current, narrower $20,000 measure.

For an asset costing $20,000 or more, there’s no partial application of the instant write off. You can’t split a $30,000 machine into “$20,000 instant, $10,000 pooled.” It’s an all-or-nothing test based on the asset’s total cost.

If you’ve previously claimed an instant deduction for an asset under simplified depreciation, and you later spend money improving it, that improvement cost can potentially also be immediately deducted, provided the improvement itself costs less than the $20,000 limit in the year it’s incurred. This matters for CNC owners who add a fourth axis, upgrade a controller, or retrofit tooling onto a machine they’ve already claimed.

Because the instant write off’s threshold and eligibility have shifted multiple times over recent years, don’t assume the rule that applied to a machine you bought two years ago still applies to one you’re buying now. Check the current settings for the income year in which you’re making the purchase, not the settings you remember from a previous EOFY.

What “first used or installed ready for use” means for a CNC machine specifically

This phrase carries more weight for CNC equipment than for almost any other asset class a small business buys, because CNC machines rarely go from crate to production run in one step.

The ATO’s own guidance treats “installed ready for use” as a factual test, not a documentation formality. An asset is installed ready for use when it’s capable of being used for its intended purpose, even if you haven’t actually run a paying job on it yet. For a laptop or an office chair, that’s a same-day event. For a CNC machining centre, it’s the end of a process.

The most common mistake, and one flagged directly in ATO guidance, is businesses treating the invoice date or delivery date as the trigger point. For CNC machines that require supplier commissioning, controller configuration and operator training, the true “ready for use” moment often lands days or weeks after the machine physically arrives, and it needs to be evidenced with commissioning reports, signed checklists and test-cut logs.

Practically, this means a machine delivered on 20 June but not commissioned until 8 July misses the financial year entirely, regardless of when you paid for it. If your business is planning a CNC purchase timed around EOFY, work backward from the commissioning date, not the delivery date, when deciding how late in the financial year you can afford to order.

Where the usual advice gets it wrong

Most guidance on the instant asset write off treats it like a simple purchase decision: buy before June 30, claim the deduction, done. For CNC buyers, that framing is misleading because the real constraint usually isn’t the calendar. It’s commissioning capacity.

The conventional advice underestimates how often a “ready to use” machine on paper is still weeks away from an operator actually running a job on it. Site prep, power certification, and test cuts all take real time, and suppliers get booked out hardest in the exact weeks everyone else is also rushing to beat EOFY. Waiting until May to place an order for a machine that needs foundation work is not a tax strategy. It’s a bet against your own supplier’s calendar.

The other place standard advice falls short is treating the write off as the main event for expensive machinery. It isn’t. Most full CNC machines cost well above $20,000, which means the write off is largely irrelevant to your biggest purchase decision. The finance structure you choose, chattel mortgage, lease, or cash, will usually shape your tax and cashflow position far more than whether an accessory purchase happened to sneak under a threshold.

If there’s one priority worth acting on, it’s this: lock in commissioning timelines before you lock in a purchase date, and treat tax treatment as the second question, not the first.

— Scott

Getting your CNC purchase installed and claim-ready

Tax timing shouldn’t be the reason a CNC purchase drags on. Anderson coordinates site readiness assessments, installation scheduling and commissioning support as part of the purchase process, which directly reduces the risk of a machine sitting uncommissioned past a financial year deadline.

Anderson

If you’re weighing up a machine purchase against the current $20,000 threshold, or working out whether a chattel mortgage makes more sense than waiting on pool depreciation, the finance and installation conversations go hand in hand. Anderson’s team can talk through expected installation lead times for machines like the AXXIOM 5-Axis Series, and connect you with finance partners who understand equipment lending for manufacturers. Browse the full CNC machinery range to see what fits your production needs, then get in touch through the Anderson team to request a site readiness assessment before you finalise a purchase date.

Where to check the official rules

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.

Sources

Scroll to Top