The 2015 budget earlier this year raised eyebrows amongst some, however had small business owners ecstatic. A number of very beneficial changes were made to legislation that effect small business owners. The biggest talking point being the changes surrounding the existing accelerated depreciation rules.
Previously, business were only eligible to claim instant tax deductions of $1000, however this has been revised up to $20,000 (including GST).
If you intend on purchasing a work vehicle to take advantage of this new rule, your business must satisfy a number of criteria. Most importantly your business must have annual turnover of less than $2M, and the vehicle must be used primarily for commercial purposes. The incentive is only running up until the 30th June 2017, should everything go to plan, and therefore businesses should get onto the incentive sooner rather than later!
Don’t be surprised if you begin to see car dealerships offering sub $20,000 deals as an incentive for businesses to make a purchase! It doesn’t matter whether the car is new or used; the accelerated deduction rule still applies.
If you are considering a car over $20,000 it can still be deducted under existing depreciation rules as per relevant tax law, however it will not qualify for the new accelerated depreciation incentive.
Finally, it doesn’t matter whether your business is purchasing the vehicle outright or through finance – the rule still applies. If you are considering taking advantage of this incentive come and see us at New Start Finance to discuss an appropriate financing plan that will enable you to purchase a new business vehicle, whilst at the same time not putting enormous stress on your business liquidity