With interest rates on the rise, stock levels at all-time lows and a new financial year just weeks away, now is the time to understand and place greater importance on securing your company assets prior to the expiration of the Instant Asset Tax Write Off and the June 30 deadline. However, what you may know about the Instant Asset Write Off for your assets and vehicles may actually be incorrect.
Myth 1: Paying for the asset is enough to qualify…
Unfortunately, this is incorrect.
As per the ATO wording, the asset needs to be registered, and usable prior to 30 June. In the case of a vehicle, this means it must be registered AND on the road. Not sitting in a shipping container on its way to Australia.
There’s no need to panic, a solution to this problem can be found if you’re open to purchasing a used vehicle.
Solution: Used vehicles will still qualify for the instant asset write off, it may be beneficial to buy a demo/near new model if you can find one, rather than waiting and missing out. With vehicle stock levels being extremely low, even this can be a challenge if you leave it too late.
Myth 2: I’ll get a better deal if I wait until the very end
Once again, this is incorrect. With vehicle stock levels at all-time lows, dealers (both new and used) are very unlikely to offer discounts on any stock at the moment as it is so hard to come by. With supply levels so low, and demand so high, basic economics shows that prices will rise. Sellers will be unlikely to offer any discounts as they know another buyer will be waiting.
Chances are you will be paying full retail price, (or higher) whenever you purchase your vehicle regardless of when you make the purchase. The time it takes to obtain finance also blows out towards 30 June 30 as lenders become overrun with finance applications, in some cases, it can take up to six business days to hear back on your application. This means leaving it to the last minute will likely leave you desperate and falling victim to a high-interest rate lender or missing out altogether.
Top tier bank interest rates are also rising almost every week – this means locking in a deal now is your best chance to save on your monthly repayment, as well as save on the stress of leaving it to the last minute.
Myth 3: I have to own the asset outright (pay cash) in order to qualify
This is not true. Having a finance contract in place does not affect your ability to claim the instant asset write off.
Make sure you plan around the 30 June deadline, always having it at the back of your mind. Your planning will help your ability to obtain the right finance and give you the best choice in vehicles, as well as avoiding the stress and hassle of a last-minute purchase.
Make sure to get advice from your accountant, in conjunction with the knowledge of your finance broker – this will leave you in the best possible position to take advantage of the tax concessions around purchasing your next business assets.