The Australian Government has announced an extension to the Instant asset write-off scheme that sees the deadline move to the end of this year.
The extension to the write-off program, which was due to expire June 30 2020, lets businesses operating with an annual turnover of up to $500 million per year instantly write-off purchases of up to $150,000.
The regular scheme was applicable on purchases of only up to $30,000 and for businesses making up to $50m per year, but coronavirus lockdowns and the slowing economy inspired the federal government to boost the scheme temporarily.
While the up to $150k write-off is particularly alluring for business purchases on utes and vans, as always, it’s important for keen business owners to talk with an accountant to make sure that the vehicle will indeed be considered a needed work expense. Some of the requirements on light commercial vehicles (LCVs) for instance include a payload of one-tonne or more. Utes like the Ranger Raptor and Chevrolet Silverado don’t have a one-tonne payload.
The Government predicts that around 3 million small businesses and sole traders will take advantage of the write-off scheme. Federal Chamber of Automotive Industries (FCAI) CEO, Tony Weber, praised the action of Government to boost the economy and help car brands and dealers to lift turnover – though the car industry has been declining for more than two years now.
“The automotive industry in Australia has been in decline for some time,” he said.
“As at the end of May 2020, the market had seen 26 consecutive months of negative growth. In addition, the market dropped 48.5 per cent in April 2020 (compared to April 2019), and declined another 35.3 per cent in May 2020 (compared to May 2019).
“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.
“New car dealerships employ more than 60,000 people nationally and are significant contributors to community and regional economic growth through employment, training, and philanthropy.
“It’s great to see the Federal Government’s support for these small businesses through a number of initiatives such as JobSeeker and JobKeeper, and now through the extension of the instant asset write-off program.”