In October last year, the government introduced temporary full expensing of eligible business assets in a bid to help businesses continue to survive the economic fallout of Covid-19 and the restrictions and chaos that ensued and to help boost Australia’s economic recovery. If you are wanting to upscale your business and start the new financial year on the right foot, equipment finance may be the way for your business to take advantage of this scheme.
What is temporary full expensing of assets?
If your business has an aggregated turnover of less than $5 billion, you can deduct the full cost of an eligible depreciable asset of any value in the financial year it is installed. The depreciating asset must be:
- new or second-hand (if it is a second-hand asset, your aggregated turnover is below $50 million)
- first held by you at or after 7.30pm AEDT on 6 October 2020
- first used or installed ready for use by you for a taxable purpose (such as a business purpose) between 7.30pm AEDT on 6 October 2020 and 30 June 2023.
As well as claiming an immediate deduction for the business portion of the cost of an eligible asset, you can also claim an immediate deduction for the business portion of the cost of any improvements to an eligible asset if it is incurred before 30 June 2023.
Important things to take note of
You can claim deductions for more than one vehicle or piece of equipment. You may only claim the portion of the asset that you use for business, not personal, use. Not every purchase will qualify, so we recommend that you consult your tax accountant before purchasing. Exclusions apply.
More information can be found on the ATO’s website.
*It’s important to be aware that if you are wanting to take advantage of temporary full expensing this financial year, you will need to purchase and install ready to use/or start using before June 30th, 2021.
Small business grants and programs
Along with tax incentives, there are also a variety of Government grants and programs currently available to small businesses in Queensland. These include:
- SmallBusiness Financial Counselling Service
- Backing Queensland Business Investment Fund
- Show Starter Loan Scheme
- Backing Individuals Fund
For a comprehensive list, please head to the Government’s website and type in your postcode.
Small business equipment finance
If you are wanting to maintain your business’ cash flow and working capital, Seek Financial can help with your equipment finance needs. We’ll work with you to find the right finance for your business and then negotiate and work with the lenders on your behalf to get you the most competitive deal.
Along with the potential tax advantages to make the most of, the advantages of equipment finance include:
- Equipment can generate immediate income
- Repayments let you budget more accurately
- A pre-approved line-of-credit means you have money in your back pocket ready for when you need it.
What equipment can I finance?
Any plant or equipment that can help generate income for your business can usually be financed. These include:
- Motor vehicles
- Commercial vehicles
- Engineering equipment
- Computer and technology
- Medical and dental equipment
- Office equipment
- General business equipment.
Please contact us if you would like to take advantage of temporary full expensing of assets before 30th June 2021. Please also be aware that it may take several weeks for your loan to be finalised so if you are thinking about purchasing equipment for your business, we strongly recommend that you get the process started right away.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax and accounting advisors before engaging in any transaction.