Business new car buyers have been handed a lifeline in the form of an extension to the instant asset write-off scheme.
The deal now sees ABN buyers able to claim up to $150,000 in purchases off their taxable income, as long as the purchase is made before 2021.
The scheme was previously only available until June 30, but federal treasurer Josh Frydenberg announced overnight that it will be extended until the end of the year.
This now means that businesses which earn up to $500 million a year are now able to deduct purchases up to $150,000 from their tax in the year the asset was purchased, up from the old threshold of $30,000.
It’s a particularly important expansion of the scheme as some businesses may have found it difficult to make large purchases while also weathering poor income during coronavirus lockdowns.
As business starts to pick up with the easing of restrictions in the latter half of the year, more businesses are better placed to look again at significant investments such as the purchase of a trade vehicle, small business fleets and vehicle modifications.
It’s something that the industry has been calling out for in order to help along the particularly hard-hit new car sales market.
The Federal Chamber of Automotive Industries told WhichCar last month that it was hoping the instant asset write off would get buyers back into new car showrooms, but called for the scheme to be extended.
Reacting to the news today, FCAI chief executive Tony Weber welcomed the extension, saying “we need to kick start the new vehicle market by stimulating new vehicle purchases, and the instant asset write-off is an important tool in this process.
“We would like to see small businesses follow through on their pre-COVID investment strategies, and replace their older vehicles with new, safer, and more efficient models.”
It’s important to remember, though, you still do have to pay for your goods initially, so make sure you consult your accountant before stumping up a pile of cash on a car.
After that, it’s best to adhere to the old adage that honesty is the best policy when it comes to tax time, and make sure you place an accurate percentage value on each of your shiny new assets in regards to how much time they are used in a ‘work capacity’ and how much is leisure.
If you do it properly, there’s plenty of scope to make a decent saving – or at the least, a significant cut to your annual tax bill.
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For those playing at home, you can see a wide-ranging round-up of vehicles that are currently discounted in the lead up to June 30 here, and even cars that are entering run-out make for good buying.
Things are looking up for dealerships throughout the remainder of the year, and the FCAI is showing “cautious optimism” of times ahead with the current stimulus provided by the government.
Add to the fact that some builders will be seeing the benefits of the $25,000 HomeBuilder package, and tradies are looking at some significant incentives to help them through a disastrous 2020.