When the federal government made enhancements to the Instant Asset Write-Off (IAWO) program in October 2020, it opened the door to provide increased tax benefits to almost all Australian businesses.
In the May 2021 Federal Budget announcement, the program was then extended through to 2023.
With the end of financial year fast approaching, it’s a crucial time to speak to business customers who are looking to upgrade their equipment and claim the maximum tax benefits before June 30.
Here are some Fast Facts about IAWO:
- No $$ limit on the cost of the new business asset purchased*
- Write-off claims can be made in the year which the asset is used or installed
- Claim multiple new eligible assets of any dollar value, and eligible improvements on new and existing assets
- Financed equipment and cars can still claim a deduction for the cost of eligible items
- Program end date extended to 30 June 2023
- Business with a turnover up to $5bn may be eligible
Business Vehicles
The IAWO provides companies the perfect opportunity to upgrade vehicles and claim the deduction this financial year. With current national stock shortages on popular makes and models, business owners need to act fast to receive delivery of their vehicle before June 30. We recommend arranging finance pre-approval for your customers and encouraging them to order now to avoid disappointment.
Equipment
Whether you have customers in manufacturing, warehousing, mining, agriculture, logistics or construction, it’s time to talk to them about possible upgrades to their capital equipment so they are eligible to claim a full tax benefit in their 20/21 tax return.
How can businesses claim instant asset write-off?
If an asset is purchased under the threshold amount, the business portion of the asset’s use can be claimed in the company’s tax return for that financial year.
Before making any large purchases, we suggest business owners speak to their accountant or tax professional to confirm if financing business vehicles, plant and equipment could help to maximise their tax deductions and reduce tax payments this financial year.
Finance Solutions
Asset Finance Brokers can help clients maximise this government business stimulus and present solutions for the best lender and asset finance product for their needs. Help your customer’s grow their business tax-effectively today, without effecting their cash flow.
For assistance with your scenarios, contact our Broker Support Team and they would be happy to help.
*We recommend you speak to your accountant in the first instance. The instant asset write-off is limited to the business portion of the car limit for the relevant income tax year. Thresholds apply up to the Luxury Car Tax threshold limit. From 1 July 2020 the LCT threshold increased to $ $68,740. The LCT threshold for fuel efficient cars will increase to $77,565 for the 2020–21 financial year. Remember, the LCT value of a car generally includes, the value of any parts, accessories or attachments supplied or imported at the same time as the car.
