Government action enables business owners to more cheaply upgrade their business equipment.
The Treasurer announced in the Federal Budget on 6 October 2020, that the ATO instant asset write off has been extended to all businesses with turnover up to $5 billion. It now applies to all eligible depreciable assets acquired from 6 October 2020 and first used or installed by 30 June 2022. The maximum amount limit has also been removed.
Financing new equipment or a vehicle instead of purchasing it outright can be a good way to preserve cash flow and working capital. The asset might also help you to generate immediate income.
If you would like to know more, please don’t hesitate to get in touch.
Why the extended instant asset tax write off?
COVID-19 has wrecked havoc on the worlds economies. The government, Reserve Bank of Australia (RBA), and Australian Banking Association (ABA), have all taken action to mitigate the damage to our economy. Notably the government implemented jobkeeper, and jobseeker, the RBA lowered the cash rate to 0.25%, and the ABA worked with the banks to offer mortgage deferrals. These measures were implemented in the face of extreme difficulty for Australian families, with 2.3 million borrowing families in mortgage stress, 1.5 million families reliant on credit, and 100,000 families at immediate risk of defaulting.
These measures were instrumental in avoiding the systemic defaults that could have occurred had they not been implemented, and it is the reason why they have since been extended to 2021.
How does this help you upgrade your business equipment?
These actions, especially the RBA rate cut, have resulted in a drop in interest rates as banks compete for your business. Both variable interest rates, and fixed interest rates are at all time lows. A fact which first home buyers have been taking advantage of, getting into the property market now, when the cost of borrowing is at its cheapest, which led to a decade high number of first home buyers this year. Indeed, this has been a very good time to get into the property market.
It is also a very good time to upgrade your business equipment. With the instant asset write off and the low interest rates, you could lock in a sub 2% interest rate and redeem part of your investment from the government.
How we can help you find the money to upgrade you business equipment.
At Finance Mutual Australia, we negotiate and work with the banks on a daily basis to help our clients secure cheaper and more flexible loans. Our process is simple, first we learn about our clients, what their business, and financial needs are, and then we negotiate with the banks to find you the best deal. If you would like to borrow from the banks to upgrade your business equipment, please, contact us today.