Instant asset tax write-off now extended to the end of 2020.
June 10, 2020
Don't miss your opportunity to take advantage of the $150,000 instant asset tax write off, now extended until the end of 2020 for a new commercial vehicle.
What does the instant asset tax tax-write off mean for you?
If you haven’t already looked into the benefits of the instant tax asset write off for your business now is the time. By taking advantage of the stimulus package introduced by the Scott Morrison government you could acquire new business assets, including vehicles, from your tax alone. Previously estimated to end June 30, Josh Frydonburg on the 9th of June announced the instant write off has now been extended through to the end of 2020.
“Our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly,” prime minister Scott Morrison explained.
Formerly introduced for businesses turning over $50 million or less a year, the threshold for businesses to take advantage of the stimulus has now been increased up to $500 million a year in order to take advantage.
“The $150,000 instant write-off decreases your payable tax on business-related purchases and is a temporary increase expected to last until June 30th, 2020,” explains Booth’s motor group.
This means you can spend up to $150,000 on assets, enabling your taxable income to be reduced by the same amount! The threshold is calculated per asset valued under $150,000 making it possible to instantly write off multiple assets.”
How can you take advantage of the instant asset tax write off to buy a new vehicle?
Eligible for both new and used vehicles, if you are looking to purchase a vehicle solely to assist your business, or at least over 80% of the vehicle's use for business purposes, you will be qualified to receive all or a large majority of it back as an asset write off as a business tax deduction.
Booth’s Motor Group does describe it as “the ultimate business tax deduction for buying a car”.
The percentage the vehicle is used will determine the amount of tax you will be able to get back. For example, if you are looking to buy a car for $90,000 but you are only intending to use the car 90% of the time for business purposes you will be eligible to write off $81,000.
For vehicles like one-tonne utes, vehicle owners are able to claim the entire purchase value on the vehicle.
However, if the vehicle exceeds $150,000 it is then deemed ineligible for the tax write off.
ELIGIBLE: An independent tradie purchases a one-tonne ute for $145,000 that’s 100 percent business use = they will be able to claim the full $145,000 back under the instant asset write-off scheme.
INELIGIBLE: A business owner buys a luxury car for 50 percent business use that costs $120,000 but the luxury car tax adds 33 percent making the total price $159,600 = they are ineligible for the luxury car tax because they are above the $150k threshold.
ELIGIBLE: A florist buys a 100 percent business use van and adds several accessories for a total of $40,000, plus insurance and registration for another $2500 = the florist can claim the total purchase price of the van and accessories back, but not the insurance and registration costs.
ELIGIBLE: A sole trader buys a $30,000 hatchback and finds that they use it for 75 percent business purposes and 25 percent personal use = they can claim back 75 percent of the total purchase price, meaning they are able to write off a total of $22,500.
ELIGIBLE: A business owner buys aMercedes-AMG CLA45 for $115,000 to drive to and from clients during the week and keeps a logbook that reveals it's used for 30 percent business use = they can claim 30 percent of the luxury car limit of $57,581.
INELIGIBLE: A business owner buys a $50,000 ute for business use on June 25, 2020, but with shipping delays, it will arrive on July 30, 2020, = they are ineligible for the instant asset write-off because the car is not installed and ready for use between March 12 and June 30, 2020.
INELIGIBLE: The florist's employee owns a $25,000 hatchback that he uses to ferry flowers around in business hours = he is ineligible for the instant asset write-off scheme because he is an employee and not a business owner or sole trader.
INELIGIBLE: A business owner buys a car for exactly $150,000 = they are ineligible because the car must be less than the $150,000 threshold.
Can I get a business car loan and still be eligible for the instant asset tax write off?
Yes, any financed vehicle is still eligible for the instant asset write off. Brokers have now been given access to accelerated lending processed and fast-tracked funding so those looking for a commercial vehicle will have access to them faster.
Previously individuals needed to have physically received the vehicle prior to June 30 for the cut-off, however, with the extension, this will only be relevant to claim back for this financial year.
Talk to CarClarity today to understand your best options for new commercial vehicle financing.
David Fahim is CarClarity's COO, joining forces with two founding team members that share the same passion of helping customers get the right car loan.
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