What car buyers need to know about the Federal Budget
Expansion of the Instant Asset Write Off Scheme
The recently unveiled Federal Budget provides good news for business owners who are purchasing a work-related car, van or ute. Treasurer Josh Frydenberg last week announced a further extension of the instant asset write off scheme for businesses with a turnover of up to $5 billion and expanded the eligibility criteria for claiming assets on tax.
Business owners purchasing an asset will now be able to access a new scheme called “temporary full expensing”. This is essentially an updated version of the instant asset write off scheme. Previously, this had a threshold of $30,000 for each eligible asset which was increased by the Government to $150,000 in March. Now, the Government says there is no limit on asset prices.
Temporary full expensing is also available to a larger pool of businesses – those with a turnover of up to $5 billion.
What Car Buyers Need to Know
If your business is eligible you’ll be able to claim back either part or all of the cost of a new work related vehicle until 30 June 2022. If the vehicle can carry more than one tonne or nine passengers, you can claim back the full purchase price. If it’s designed to carry less than this, you can claim up to the ‘car cost limit’ of $59,136.
What does this mean for pre-owned vehicle purchases? Second hand assets are still eligible to be claimed, just as they were under the instant asset write-off scheme, for small and medium sized businesses with an aggregated turnover of less than $50 million.
Additionally, all businesses are able to deduct the full cost of improvements made to depreciating assets, even if these assets were purchased prior to the budget being announced. For vehicle owners, these “improvements” could include things like roof racks or tow bars.
The scheme will apply to eligible assets purchased from 7.30pm AEST on 6 October 2020 and first used or installed by 30 June 2022. It is also subject to legislation passing through parliament.
The Government estimates that 3.5 million businesses will be eligible for this transformative scheme in a move which has been very well received by the business community.
At John Hughes we offer a wide selection of new and pre-owned vans, utes and cars, suitable for commercial purposes. View our range of stock here.
This information is provided as a guide only. It is important to note that you should get your own professional advice before making financial decisions as individual circumstances may vary.