IN light of the Morrison Government announcements regarding the economic stimulus plan, we have summarised the high points for your review. Take note of the $150,000 instant asset write-off (IAWO)!
What’s included for small or medium business owners?
· The government is increasing the instant asset write-off threshold to $150,000 from $30,000 until 30 June 2020.
· The write-off benefit will now be extended to businesses with a turnover of up to $500 million, up from $50 million before.
· Accelerated depreciation deductions are available for businesses with a turnover of less than $500 million. The business will be able to deduct an additional 50 per cent of the asset cost in the year of purchase.
· Businesses with turnover under $50 million that employ staff between 1 January 2020 and 30 June 2020, will have access to a tax-free payment between $2,000 and $25,000 to help boost cash flow.
· There will also be wage subsidies for 117,000 apprentices and trainees.
Therefore, if you have been looking to invest in your business, now is the time so you can benefit from these new government stimulus payments and incentives.
How does this relate to Cars?
When a vehicle is purchased for business-use for instance, between now and 30 June, 100% of the cost can be written off immediately, essentially providing an instant 30% saving on your acquisition!
Nonetheless like all good things, there is fine print! Here is what is not being said:
There is still a car cost limit on motor vehicles, being $57,581 including GST, according to the current guidelines set out by Treasury and the Australian Tax Office (ATO).
So the maximum GST Paid that can be claimed is $5,234 and the maximum depreciation (IAWO) is $52,347.
For ABN holders who are not registered for GST, they can claim the $57,581 immediately as the IAWO.
Therefore, for example, if you are interested in purchasing a motor vehicle worth $75,000.00, you would be able to claim the total $57,581 through GST and depreciation (IAWO) not the new proposed limit of $150,000.00.
It is advisable to verify your current status with your Chartered Accountant.
Additional information on the Government stimulus can be found here.
As always we invite your inquiries and look forward to engaging with you to discuss all matters Cars & Lifestyle.