The Clock is ticking…you need to act now if you wish to take advantage of the $20k instant asset write off this financial year!!
If you’re running an ABN-registered business with a turnover of less than $10 million, you can take immediate advantage of the recently extended $20k Instant Asset Write Off initiative.
The initiative allows your business to immediately deduct the full cost of any physical items you purchase prior to 30 June 2018 costing less than $20,000….such as computers, shop fixtures, cars, tools, etc.
It’s an amazing opportunity to purchase vitally necessary assets for your business if you have that need and use your tax dollars to assist with the investment.
It’s important to correctly structuring your finance!
Correct structuring of your finance will result in amazing cash flow benefits for your business, so prior to making any investment, give us a call and we’ll let you know if you’re on the right track.
How does it work?
If you were to purchase a vehicle with the correct finance contract for $20k and settle the purchase prior to the 30/6/2018 then you would immediately obtain a $20k depreciation deduction in the 2018 financial year.
If we apply a 30% tax rate for this example, then this is effectively a $6,000.00 hand out from the ATO!
If we were to apply the normal depreciation rate for vehicles of 22.5%, then the benefit is effectively reduced to $1,350.00…which represents a difference of $4,650.00!!
You won’t be able to claim any further depreciation on the vehicle in the following years, but I’m sure you can live with that.
Now on top of this, if you correctly finance the purchase you will be entitled to claim the GST back on the purchase in the June QTR. If for the sake of the example, the GST is $2k, that means an immediate cash injection to your business of $2k.
If you add the tax savings and the GST refund, this comes to $8,000.00!
This amount would effectively cover your repayments on the vehicle for the next 18 months.
It’s hard to argue that’s a juicy incentive to help you expand your business or to make it a little more productive.
Time is of the essence!
The clock is ticking and if you wish to take advantage of the initiative this year, you’ll have to move immediately.
At the end of each financial year Equipment Financiers become heavily backlogged as customers hustle to acquire goods prior to the EOFY. You also have to be mindful about your suppliers being able to deliver the products prior to the end of June.
If you would like to find out more or discuss your finance options please contact us immediately on 07)5554 5221.
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Article by Shayne Fergus, Capital Funding Group
