Time is running out to take advantage of the 2020-22 Instant Tax Write-off approved from the Australian Government stimulus package in the 2021 tax year. Call your Finport representative today to discuss how it can work for you!
What is the instant tax write-off?
The instant asset write-off allows eligible businesses to claim an immediate deduction for certain costs relating to depreciating assets.
The Federal Budget 2020-21 introduced temporary measures that have built on the instant asset write-off previously in place.
How it Works!
Businesses with an aggregated turnover of up to $5 billion may be eligible.
Depreciating assets may include new business vehicles and equipment. For businesses with aggregated turnover of less than $50 million, the assets can be second-hand.
Businesses with aggregated turnover between $50 million and $500 million may be eligible to deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 and first used or installed by 30 June 2021.
Deduction claims may be made for the year in which the equipment is used or installed ready for use. This may be the same year in which you finance the equipment.
You may be able to borrow funds to purchase equipment and still claim a deduction for the cost of eligible items.
Generally, depreciating assets must be acquired after 7:30pm AEDT on 6 October 2020 and installed ready for use by 30 June 2022.
For detailed information on the measures visit the ATO website.
Further changes were announced by the Federal Treasurer on 23 November 2020 mean more businesses may qualify. A new alternative test will apply requiring businesses to have less than $5 billion in statutory and ordinary income (generally income assessable in Australia) in either the 2018-19 or 2019–20 income year AND have invested more than $100 million in tangible depreciating assets in the period 2016-17 to 2018-19. This change will mean businesses with an aggregated turnover of more than $5 billion due to the income of an overseas parent or associate will now be able to qualify provided they meet the 'alternative test'. For detailed information relating to the alternative income test visit the ATO.
*Not the actual Crane Purchased
Case Study
Greg's crane business
Greg owns a crane business with a turnover of $9 million.
In March 2021, he decides to upgrade one of his work trucks and his Terex Franna.
Greg spends $100,000 on a new truck and $240,000 on second-hand crane.
In preparing his tax return for the year ending 30 June 2021, Greg should be entitled to claim $340,000 as an immediate tax deduction for that financial year.
Where Finport helped... ABC bank funded the new truck but wouldn't help fund the import of the crane from Europe nor would they approve an equipment finance lease on an older second-hand item. Finport packaged up import finance into a asset finance loan in quick time.
What your business could now claim
If your business has an aggregated turnover of less than $50 million, the full cost of all eligible second-hand assets may also be claimed.
Call your Finport Representative today! Time is running out for this 20-21 tax year.