If you're moving forward with your business growth and investment plans with the acquisition of assets, you may be eligible to take advantage the accelerated depreciation benefits under the Backing Business Investment program.
In response to the economic impact of the coronavirus on businesses, the Federal Government announced a number of measures to support businesses. While some of the offers and programs have expired, the Backing Business Investment (BBI) is still in play through to 30 June 2021.
BBI is an incentive to support business growth through investment by allowing accelerated depreciation on eligible assets. This measure was introduced by the Federal Government in March 2020. But we know that was a very uncertain and disruptive time for many business owners and you may not have had a chance to look into the benefits for your operation.
We give you a run-down of the key issues and can provide you with a quick quote on finance to purchase the eligible assets.
Benefit to Be Realised
Eligible business can accelerate the rate of depreciation on eligible assets. It allows for a 50% deduction of the cost of eligible assets within the set time frame which expires 30 June 2021. The remaining 50% of the cost of the asset is depreciated under existing rules.
Eligible Businesses and Conditions
- Businesses with less than $500m turnover in 2019/20 and 2020/21 income years.
- Different rules for small businesses using simplified rules in relation to capital allowances.
- To determine if your small business or other sized business is subject to special conditions, refer to ato.gov.au and search backing business investment for details.
Eligible Assets - Overview
- Must be acquired after 12 March 2020 and installed/used before 30 June 2021.
- Not applicable to assets which were ‘previously held by another entity’.
- No applicable to assets which have had had IAWO or other depreciation deductions applied.
- There is no limit to the number of assets.
- No limit to cost of eligible assets with the exception of passenger vehicles.
- Passenger vehicle assets designed for less than 9 passengers and a load of less than 1 tonne, special conditions apply. If the car costs more than the limit, the cost must be reduced before calculating depreciation. Other depreciation rules cannot be used to deduct the excess cost. Please refer to the specific wording of this condition on the ATO website or refer to your accountant for guidance.
- Special conditions apply to assets acquired for use in research and development purposes. Please refer to the specific wording of these conditions on the ATO website or refer to your accountant for guidance.
Ineligible Assets and Conditions
Not all business assets are eligible for this accelerated depreciation measure.
The ATO site advises that the following assets are not eligible:-
- Second hand depreciating assets.
- Selected Division 40 assets which are low value and software development pools.
- Some primary production assets.
- Some assets which are deductible under Division 43 – buildings, capital works etc
- Assets that you committed to purchasing prior to 12 March 2020
- Some other capital assets
We recommend that you refer to the specifics on the ATO website or your accountant for guidance around your business.
Timeframe
The accelerated depreciation measure applies to eligible assets that are purchased after 12 March 2020 and are installed in the business and used in the business operation before 30 June 2021.
Applying for the BBI Accelerated Depreciation
While some of the eligibility criteria, conditions around the inclusion of some assets and other rules with the accelerated depreciation, the good news is, there is no big application process. You simply claim the tax deduction for the depreciation in the relevant tax return.
Streamlining Asset Acquisition
Jade Finance can assist in streamlining your purchase of eligible assets by sourcing cost-effective finance for the assets and handling much of the paperwork associated with the loan process.
Subject to the eligibility criteria, we can provide a quote on a loan for:-
- Business vehicles
- Trucks: light commercial vehicles, medium duty and heavy duty trucks for many applications.
- A wide range of equipment to use in your business: construction and earthmoving equipment, manufacturing equipment, engineering machinery, medical equipment, fitness and health equipment, mining equipment and much more.
We offer the full selection of commercial loan products: Leasing, Rent to Own, Chattel Mortgage and CHP. Some finance types may be better suited to your business realising the tax benefit of the accelerated depreciation measure. Consult with your accountant as to which finance type is best suited to your business.
Your Jade Finance will source the cheapest quote on finance to meet your requirements.
To discuss finance for assets contact Jade Finance 1300 000 008
DISCLAIMER: THE INFORMATION PROVIDED IS FOR GENERAL CONSIDERATION. ANY REFERENCE TO OFFICIAL GOVERNMENT POLICIES HAS BEEN SOURCED FROM AUSTRALIAN GOVERNMENT AND STATE GOVERNMENT SOURCES. INFORMATION ON INDIVIDUAL VEHICLE SPECS IS SOURCED FROM THE MANUFACTURER WEBSITE. NO LIABILITY IS ACCEPTED FOR ANY ERRORS IN PRESENTATION OR INTERPRETATION OF THE FACTS AS PROVIDED BY THESE SOURCES. WE ADVISE ALL INDIVIDUALS AND BUSINESSES TO REFER TO THEIR ACCOUNTANT OR FINANCIAL ADVISOR FOR PROFESSIONAL ADVICE SPECIFIC TO THEIR INDIVIDUAL CIRCUMSTANCES.
