Well, here's some much needed good news for tradespeople and small business owners. The Australian Government's Instant Asset Write-Off (IAWO) has been extended until the 31st of December! As you may have read in our previous article, the initial deadline was set at the end of June. Now, that's been pushed back by another six months.
This extension means that those buying work vehicles but may not be able to beat the old deadline can still enjoy this tax benefit until the end of this year. The only difference now would be that the benefit would be applied to the 2020/2021 financial year instead.
What is the Instant Asset Write-Off (IAWO)?
To recap, the IAWO is part of the Australian Federal Government's efforts to stimulate the Aussie economy during the coronavirus pandemic. Through it, businesses with an annual turnover of up to $500 million can claim an asset write off or deduction from their taxable income (with a maximum value of $150,000 per asset) in one financial year instead of over several years.
In total, the Australian government has budgeted an additional $300 million to help an estimated 3,000,000 traders as well as small and medium enterprises through the IAWO.
Who DOESN'T qualify for the IAWO?
According to the Business.gov.au website, businesses with a turnover of $500 million or above are not eligible for this scheme. It’s a privilege made available for small and medium businesses only.
Can it boost the lacklustre car sales in Australia?
We’ve seen how the Australian automotive industry has struggled the past several months, with 26 consecutive months of negative growth complicated by the coronavirus pandemic. Things are not promising at all on the selling side of the automotive industry.
On the buying side, a lot of small businesses that would typically be buying vehicles like utes are reluctant to purchase new work vehicles right now. Hopefully, the IAWO extension would incentivise them to get their business some new wheels. This will help ignite not only the operation of the businesses, but the car industry as well. The IAWO, by the way, is applicable for the purchase of used and new assets.
Sources in the Aussie automotive industry agree that this extension will attract more buyers and allow more people to benefit from the scheme. They add that this scheme will be much more effective during the recovery phase of the Australian economy, as business starts to pick up again.
Advice for buyers
If you and your business are looking to take advantage of the IAWO, be sure to seek advice from an accountant or someone similarly qualified to walk you through the process. That way, you'll be able to ensure your eligibility while also assuring that you gain as much benefit from this scheme as possible.
Where to get more information
To find out more about the IAWO, you can head over to the Australian Taxation Office's website, where you will find full details on eligibility, thresholds, exclusions and limits, and much more about the IAWO. There's a lot of information to take in, so be sure to get someone qualified to walk you through it.
Get updated about what's happening in the car industry and the car part sector, especially as the economy moves to the recovery phase. Read the latest from CarPart’s website. It's also where you get help when you need to locate auto parts fast. Click here to request for parts online!
By Ray Hasbollah