Car industry calls for extension to $150,000 instant asset write-off

The peak body – which represents 60,000 employees at 3500 dealerships nationally – says most car buyers haven’t been able to take advantage of the tax incentive due to tighter finance requirements during COVID-19, uncertainty around vehicle eligibility, and other restrictions caused by coronavirus lockdowns across the nation.

In early March, the Federal Government introduced as a temporary measure the possibility for businesses to claim the purchase of any eligible asset up to the value of $150,000 as a tax deduction in this financial year, due to end on June 30.

As reported by Drive yesterday, there is widespread confusion about which types of vehicles and business uses are eligible. 

However, in addition to seeking clearer guidelines, the AADA has asked for a six-month extension through to the 1st of January 2021 – rather than the end of June 2020 – because most businesses either postponed or were not able to purchase motor vehicles in April.

However, if the new-car market remains in a slump for the rest of this year, the AADA wants the Federal Government to consider a further six-month extension – effectively extending the scheme by a total of 12 months to the end of next financial year.

“The expanded instant asset write-off policy announced on 12 March needs to be extended a further six months, to January 1, 2021,” said James Voortman, the CEO of the AADA. 

“If (new-car sales) remain depressed, the scheme should be further extended to July 1, 2021,” Mr Voortman added.

“Because of the scale of the economic downturn, many businesses have not been prepared to invest in assets during this lockdown phase,” said Mr Voortman. 

“In addition, many of the intended recipients of the instant asset write-off, such as sole traders, are being treated as high risk customers by lending institutions.”

The AADA says the instant asset write-off scheme will be “more effective in the recovery phase of the (market) downturn”. 

“The Government should also remove the car limit of $57,581, which is an unfair disincentive applied to one particular class of products, and encourage as many businesses as possible to make use of the full $150,000 limit,” said Mr Voortman.