Tradies and small business fleets have been given an extension to cash-in on the Federal Government’s $150,000 instant asset write off scheme, after it was announced overnight the deadline has been moved from the end of June 2020 to the end of December 2020.
The six-month extension means business buyers who may not be able to take delivery of a new work vehicle before the original 30 June 2020 deadline can now take advantage of the tax benefit in the 2020/2021 financial year.
The Australian car industry has welcomed the six-month extension of the Federal Government's instant asset write-off scheme.
The stimulus package, introduced during the coronavirus crisis to help boost the economy, means that businesses with a turnover up to $500 million annually can claim a business asset purchase up to the value of $150,000 as a deduction in one financial year, rather than claiming the expense over several financial years.
The Federal Government estimates approximately three million sole traders and small to medium businesses will be able to take advantage of the scheme, and has set aside an extra $300 million to cover the claims.
The $150,000 instant asset write-off scheme is believed to be one of the driving forces in Australian new-car sales during the COVID-19 lockdown period.
However, car dealers and the automotive industry have consistently advised buyers to check with their accountant how the program may apply to their business and circumstances.
In particular, sales of utes and other commercial vehicles have remained relatively strong over the past three months, and the overall Australian new-car market has declined at a slower rate than in Europe and North America.
The CEO of the Australian Automotive Dealers Association (AADA), James Voortman, welcomed the six-month extension of the scheme after calling for a review, claiming more buyers will be able to take advantage of the program once the economy starts to recover post COVID-19.
Last month, Mr Voortman told CarAdvice: “Because of the scale of the economic downturn, many businesses have not been prepared to invest in assets during this lockdown phase. 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 believes 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.
“If (new-car sales) remain depressed, the scheme should be further extended to July 1, 2021,” Mr Voortman added.
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