The coronavirus crisis has cast uncertainty over the investment plans of many businesses through the first half of 2020. But thanks to a joint announcement by the Federal Treasurer, Josh Frydenberg and Minister for Employment, Senator Michaelia Cash on 9 June, many are now moving those plans from the back burner to the hot plate.
The announcement signalled an extension to the Instant Asset Write Off (IAWO) measure which was part of the business stimulus package announced by the Prime Minister in March. The measure increased the threshold to write-off assets for eligible businesses from the $30,000 to $150,000 up to 30 June 2020.
This new announcement extends the deadline to 31 December 2020.
So if you had paused your plans to invest in new equipment, business vehicles, trucks or vessels for your business, now could be the time to hit ‘play’ and take advantage of the IAWO. It is estimated that up to 3.5 million businesses may be eligible.
When the stimulus package was first announce, we posted a number of articles covering the detail but will recap the key points to refresh your knowledge bank and give you the chance to consider if it suits your business.
Pre-COVID-19, the tax regulations allowed businesses to write-off newly purchased assets to a threshold of $30,000.
In response to the economic effects of the coronavirus, the Government implemented a business stimulus package which included an expansion of the IAWO. This increased the IAWO threshold to $150,000 for businesses with an annual turnover under $500m for new (including used) assets acquired and in operation by 30 June 2020.
As the pandemic played out with people ordered to stay home and businesses forced to close, many companies were not in a position to take advantage of the IAWO by acquiring assets by 30 June 2020.
Many businesses were reluctant to make significant asset investments with such uncertainty surrounding the economic situation and how long the lockdown and restrictions would be in place.
As the curve was suppressed well beyond expectations, restrictions were gradually lifted through late May and into June, but many question marks were still left over many sectors. Many businesses had missed the opportunity to benefit from the IAWO measure.
By mid-June many sectors of the economy had reopened but without the time required to source, purchase and install the required assets by 30 June.
To allow and incentivise more businesses to implement their investment plans, the Government announced an extension of the IAWO from 30 June to 31 December 2020. Thus giving businesses 6 months to purchase the eligible assets.
In the joint statement Josh Frydenberg and Michaelia Cash said that the extension would allow more business to improve cash flow by bringing forward tax deductions while supported the economy in the emergence from hibernation and into recovery.
Taking Advantage of IAWO
So what does IAWO mean for your business? Essentially, you have until 31 December to purchase those business vehicles, trucks or equipment that have been considering to give your business a boost or to allow you to take advantage of new business opportunities.
The timing of the announcement is also convenient in regard to EOFY sales, discounts and other offers which many car and truck dealers and equipment suppliers will be offering.
The $150,000 threshold applies to individual assets so you could consider purchasing numerous items. Discussing the issue and the benefit to your business should be discussed with your accountant.
To check the details of eligibility, check out the original fact sheet which was posted to the Treasury website in March.
The deadline date has obviously changed but the case studies might assist you better understand how it all works.
Finance for Your Asset Investment
To finance the purchase of your assets, Jade Finance provides the complete range of business finance products. However, not all products are suited to IAWO – once again, discuss this with your accountant.
We’ve provided details of each products on our web pages.
Once you’ve established what type of loan product you require, your Jade Finance consultant can get working on sourcing you a quote. If you need to move fast in order to capitalise on EOFY offers, simply request a fast approval or pre-approved finance.
To discuss the options for your business requirements contact us on 1300 000 008 to speak with a Jade Car Loans consultant.
DISCLAIMER: THE INFORMATION PROVIDED IS FOR GENERAL CONSIDERATION. ANY REFERENCE TO OFFICIAL GOVERNMENT POLICIES HAS BEEN SOURCED FROM AUSTRALIAN GOVERNMENT AND STATE GOVERNMENT SOURCES. 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.