The world has been full of doom and gloom of recent weeks but there is always emerging opportunities in every crisis.
One such opportunity is for small to medium business created by the Government to stimulate spending and investment. It is a brilliant opportunity to invest in your business or buy new vehicle/s using money you possibly would have been giving to the ATO if not for this incentive.
The Government last week announced a stimulus package in its efforts to curb the financial effects of the Coronavirus pandemic.
For all businesses with an annual turnover less than $500 million the instant tax write off will be increased from $30,000 to $150,000.
The assets that this write off applies to are:
• Tools and Equipment
• Computer and other electronic hardware
• Office furniture
• Motor vehicles and business machinery
You can also use the write off on multiple assets allowing you to buy more than one car or vehicle for your business as well as re-equip the office. With the likelihood that the vehicle industry will also respond with extra incentives, there has never been a better time from now until June to replace your vehicle or even your fleet.
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50% Depreciation
This investment incentive is also added to a 15 month period where a 50% depreciation deduction applies to all business investment entered into during the tax year of your purchase.
Even better is you can use commercial finance products to pay for the assets and claim the entire purchase price of the product.
Add all that to record low-interest rates on finance and the bottom line is there has never been a better time to purchase vehicles and at the same time support the Australian economy.
Is it a good time to invest?
Of course, those that benefit most are those that have potentially big tax bills to pay and then there might be those businesses that feel that uncertainty requires them to be frugal and pull in the belt on spending.
However, I say to them the following:
• If business has been good to date, you will most likely have to pay the money to the ATO anyway as the tax year only has 3 months to run
• If you finance for 5 years and the current crisis lasts for say 6 more months, you are only parting with a small amount of cash during the crisis period but getting a huge benefit overall.
• Sometimes a crisis of this proportion is a good time to invest and expand your market so that when you come out the other side you have more market share than your competitors who did not invest.
Time to think and do your sums but I am sure they will all add up if you have had a healthy business for the first three quarters of the year.
