The end of financial always blows out the turnaround times for approvals and settlements, but this year we are expecting those delays to be even greater than usual. The Covid response from the funders has meant that many of their staff have been moved from assessing and settling deals, to helping process relief claims. They have still not caught up with demand for relief whilst at the same time applications and settlements are also on the rise as we move into the last month of the financial year. This combined with the fact the Instant Asset write off is due to finish on the 30th of June means we are expecting a rush for finance this month.
What is the Instant Asset Write off?
The Instant Asset Write Off has been on offer for some time but has been increased to $150k per asset due to the governments Covid response. It is due to finish on the 30th June and effectively allows for businesses purchasing assets to write off their full value in the first year, up to a maximum of $150k . This reduces profit accordingly and therefore the tax to be paid. To find out the full details click on this link https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Simpler-depreciation-for-small-business/Instant-asset-write-off/ .
In addition to the Instant Asset Write Off the government also announced a Business Investment Incentive. This runs along side the write off but covers larger asset purchases. It allows eligible businesses to write off 50% of the assets value in the first year. It will generally be used for those assets that are new, cost more than $150k and are able to be depreciated. This scheme will run until June 30 2021. To find out if you are eligible please refer to https://www.ato.gov.au/General/New-legislation/The-Australian-Government-s-Economic-Response-to-Coronavirus/#Backingbusinessincentive .
What does this all mean?
We are moving into the busiest month of the year for finance with funders that are short on staff due to the deployment of people to relief. If you add an Investment allowance that is due to finish on June 30 then we believe you will need to have your application in for the finance no later than the 15th June. We will always try to help if it’s not possible to meet this timeline but it will give you the best chance to take advantage of the various government incentives.
Please call your broker, or try us at the office on 1300 731 131 if you have any questions or need a hand with your finance.