With the economy still reeling from the impacts of COVID-19, the federal government’s budget announced earlier in the month sets the stimulus afterburners alight in its effort to boost the economy. In order to combat the sharp decline in new car sales, the instant asset write-off scheme introduced earlier this year has received a huge shot in the arm with the federal government extending eligibility criteria, increasing asset value and extending the time period during which the scheme applies.
Most importantly perhaps, businesses with an annual turnover of up to $5 billion, the vast majority of businesses in Australia, will be able to deduct the full cost of new, eligible, depreciable assets of any value in the year they are first used or installed ready for use.
Federal treasurer Josh Frydenberg has come out with all guns blazing by describing the ‘temporary full expensing’ incentive as “the largest set of investment incentives any Australian government has ever provided”.
“It is a game changer, it will unlock investment, it will dramatically expand the productive capacity of the nation and create tens of thousands of jobs,” he said.
Eligible second-hand assets for small and medium-sized businesses with aggregated turnover of less than $50 million can also be fully expensed. For businesses with a turnover between $50 million and $500 million, second-hand assets under $150,000 can now be completely expensed and written off. The instant asset write-off scheme has been extended until June 30, 2021.
The government has also splashed its cash in other ways which benefit the automotive industry. Personal income tax cuts will increase disposable incomes, increasing demand for newer vehicles. New apprenticeship positions and wage subsidies are set to ensure that mechanics are in good supply.
All of this means that as Australia finally starts to awake from its COVID-19 nightmare, there has never been a better time for businesses to buy new or used vehicles to help them generate the highest possible profits. For once we can say that we live in unprecedented times because of something positive.