Just when you thought you might be adapting to the new normal under COVID-19 and maybe settled into some sort of routine with your business, more changes in support measure conditions, regulations and restrictions come into effect. Businesses have to remain in a constant state of alert and awareness to stay across and on top of what's happening in multiple sectors.
Key issues to be across at the moment are the changes happening to several of the major Federal Government support measures. Specifically, changes to the Instant Asset Write-Off initiative and the JobKeeper wage subsidy scheme which will have an impact on many businesses.
If you plan to take advantage of IAWO but have delayed the purchase of your new equipment for any number of reasons, we advise that now is the time to put that asset acquisition to the top of your ‘to do’ list.
Winding Up: IAWO
There’s been so much to deal with in 2020, it’s hard to believe it was way back in March that the Prime Minister, Scott Morrison, introduced the Instant Asset Write-Off initiative. Intended as a measure to stimulate business investment and the broader economy in the early stages of the pandemic, the original deadline of 30 June was quite swiftly extended to 31 December. The extension was made in response to the lack of confidence by business at that uncertain time to make significant investments in new assets. Plus the difficulties presented by the shutdowns and lockdowns in businesses actually being able to source, inspect and arrange acquisitions.
Well, that extended deadline is now closing in and those that want to take advantage of the benefits need to act quickly. We advise that you refer to the ATO guidelines around the eligible assets under the scheme and business eligibility criteria to ensure both your business and the equipment you intend to purchase will meet the requirements.
Finance for IAWO Equipment Acquisitions
Arranging your finance can be one of your first steps in getting sorted and Jade Equipment Finance can act quickly to expedite your equipment acquisition. If you intend to take advantage of the IAWO, you will need to finance your equipment with a Chattel Mortgage. Jade offers Chattel Mortgage as a popular form of finance for a wide range of equipment acquisitions across many industries.
As a full service finance broker, we also provide Leasing and Rent to Own equipment finance. However, these are off balance sheet finance products and as such not applicable for IAWO. The asset must be entered on the company’s balance sheet in order to be ‘written-off’. With Leasing and Rent to Own, the asset is entered on the balance sheet of the lending company.
With Chattel Mortgage, the borrower takes ownership of the equipment and the lender takes a mortgage on the equipment as security for the finance. The asset is entered on the borrowing company’s balance sheet.
There are other differences in regard to tax deductions and the treatment of GST between Chattel Mortgage and Leasing and Rent to Own. It is advisable to consult with your accountant in regard to which finance product is best suited to your business structure and whether or not utilising the current IAWO scheme will deliver the most effective outcomes for your operation.
Winding Down: JobKeeper
JobKeeper is another Government stimulus measure that is winding down in stages. The key dates for changes to this wage subsidy scheme are 28 September 2020 and 03 January 2021. Businesses that want to keep receiving the benefit will need to reapply and meet the amended criteria.
The amount of the JobKeeper subsidy is being reduced and differing amounts introduced for full time and part-time workers.
Winding On: BBI
One Government stimulus scheme which is continuing into 2021 is BBI - Business Backed Investment. This measure allows an accelerated depreciation deduction and applies to assets acquired and installed by 30 June 2021 for businesses with less than $500m turnover. Refer to the Government website for full details of eligibility.
Businesses do not need to apply for BBI as any depreciation allowed is realised in their end of financial year accounts. While end of June 2021 may seem plenty of time to source and install the equipment you need, be mindful of disruptions to supply chains and manufacturing facilities both in Australia and overseas as a result of COVID-19. These disruptions may cause delays in the delivery of some equipment.
Winding Out: Payroll Tax Deferrals and other Measures
While some support programs are winding up and winding down, several state governments are winding out new measures for their individual jurisdictions. Deferrals and waivers of payroll tax, which is a state-based tax, in particular have been brought into effect by several states.
Check your state government treasury or COVID-19 support website for details.
Being organised well ahead with both your equipment order and your finance may put you in a better position to take full advantage of the measures being offered. Jade Equipment Finance is structured to promptly and quickly assist businesses in planning and arranging their finance requirements for all types of equipment acquisitions.
Having one of our consultants as your assigned finance broker will provide you with a direct communication channel to stay across your finance deal and give direct access via your broker to finance deals from a large number of banks and non-bank lenders.
Our accreditations include a number of industry-only non-bank lenders that specialise in equipment finance and tend to be far more competitive and negotiable on interest rates and finance terms than the banks.
To discuss your equipment finance requirements, contact Jade Equipment Finance on 1300 000 003
DISCLAIMER: ALL INFORMATION WHICH IS PRESENTED IN THIS ARTICLE IS INTENDED SOLELY FOR THE PURPOSE OF PROVIDING GENERAL INFORMATION. IT IS NOT UNDER ANY CIRCUMSTANCES INTENDED AS PROVIDING FINANCIAL ADVICE. FOR SPECIFIC FINANCIAL ADVICE ON INDIVIDUAL FINANCIAL CIRCUMSTANCES, READERS ARE ADVISED TO CONSULT WITH A FINANCIAL ADVISOR. NO LIABILITY IS ACCEPTED FOR INCORRECT OR OUT OF DATE DETAILS IN REGARD TO GOODS, SERVICES, POLICIES AND PROGRAMS MENTIONED IN THE ARTICLE. THE INFORMATION AND DATA QUOTED HAS BEEN SOURCED FROM PUBLICLY AVAILABLE SOURCES INCLUDING MANUFACTURER AND GOVERNMENT WEBSITES.