The time to buy a new or used truck has never been more in your favor with the Federal Government’s Economic Stimulus Package.
In the 2020-21 Budget, the Federal Government announced further measures to stimulate Australia’s short-term economic recovery by promoting investment in new and pre-owned equipment, while enabling business cash flow. Find out more here.
Temporary full expensing of capital assets
The Government announced a temporary measure to allow businesses to claim an immediate deduction for the full cost of eligible capital assets.
Under the current the current initiatives, businesses with annual aggregated turnover of less than $500 million are entitled to an immediate tax deduction for the cost of a depreciating asset, whether new or second hand, with a cost of less than $150,000 which is first used or installed ready for use between 12 March 2020 and 31 December 2020.
Under the new measure, businesses with aggregated annual turnover of less than $5 billion will be able to deduct the full cost of eligible capital assets acquired from 7:30pm AEDT on 6 October 2020 and first used or installed by 30 June 2022.
The announcement also extends the current instant asset write-off by giving businesses an extra six months, until 30 June 2021, to first use and install those assets.
The announcement also factors in small businesses using the simplified depreciation pool.
The implications of the new measures and the existing instant asset write-off measure are as follows:
- Businesses with annual aggregated turnover of less than $5 billion will be entitled to an immediate tax deduction for the full cost of new eligible capital assets and improvements to existing eligible assets acquired from 7:30pm AEDT on 6 October 2020 and first used or installed by 30 June 2022.
- Businesses with aggregated turnover of less than $50 million will also be entitled to an immediate tax deduction for the full cost of second-hand assets acquired from 7:30pm AEDT on 6 October 2020 and first used or installed by 30 June 2022.
- Businesses with aggregated annual turnover between $50 million and $500 million can claim an immediate deduction for the full cost of eligible second-hand assets costing less than $150,000 if they are purchased by 31 December 2020 and installed ready for use by 30 June 2021.
- Small businesses with aggregated turnover of less than $10 million can deduct the balance of their simplified depreciation pool at the end of the income year under the new measure.
|New T909 Purchase Price||100% Accelerated Depreciation Value|
Revised Asset Value for Std Depreciation
Total Depreciation Value
|Nominal Company Tax Rate||Net Tax Debt Reduction|
|Usual Year 1 Tax Calculation||$380,000||-||-||$57,000||27.5%||$15,675|
|Stimulus Year 1 Tax Calculation||$380,000||$380,000||$380,000||$380,000||27.5%||$104,500|
|Net Tax Gain from Incentive|
Please note that the information provided is general in nature and all customers must seek their own independent tax advice and accounting advice before making a vehicle purchase. New T909 example in the above table is should be taken as an example only, courtesy of PACCAR Australia.