If you've been postponing your decision to invest in a new truck, now might be the time to jump in and benefit from the COVID-19 Government support measures. This serves as a reminder that several essential measures, particularly those tailored for truck buyers, are nearing their expiration.
Since March 2020, both state and territory governments and the Federal Government have launched numerous stimulus initiatives and support programs. These were designed to provide aid during the pandemic's initial impact and foster business recovery given the resultant economic conditions. While supports like small business cash were automatically deposited, others needed applications and proactive actions.
Timeframes have been attached to these measures especially several key initiatives – JobKeeper, Instant Asset Write-Off (IAWO) and Coronavirus information and support for business and some of the those deadlines are looming.
Changes to JobKeeper
If you’ve taken advantage of the JobKeeper program you’re probably well aware of the changes scheduled for both 28 September 2020 and 03 January 2021. These are the dates when the JobKeeper wage supplement is reduced and businesses need to reapply to continue receiving the benefit. Eligibility requirements have also been amended.
Considering these changes, if you anticipate a dent in your cash flow, you might ponder over Truck Refinancing or look into other truck finance options. Your Jade Truck Loans consultant is on standby, ready to present potential refinancing pathways tailored to your operations.
IAWO Deadline – 31 December 2020!
Many of our truck loan customers have already made new truck purchases this year to take advantage of the Instant Asset Write-Off which was announced by the Prime Minister back in March.
As a recap:-
- IAWO was initially widely applauded but seemingly just as quickly, the initial deadline of 30 June 2020 was identified as unworkable for many businesses for several reasons.
- Many businesses did not have the confidence to invest in major assets, including new trucks, in that March-June period when the economic fall-out of COVID-19 was still quite an unknown factor.
- Reluctance to purchase was also compounded by logistics. Shutdowns and lockdowns meant many operators were not in a position to get out and about and go through the process of selecting, inspecting and finalising a truck purchase within the timeframe.
- Fortunately, the Federal Government listened to business and made important changes to the measure with an extension of the IAWO through to 31 December 2020.
- In order to take advantage of IAWO businesses must acquire the eligible assets and have them operational in their business before that deadline.
- There was also an increase in the threshold for assets to be eligible, from the initial $30,000 up to $150,000.
- Business eligibility was expanded to now include those with less than $500m in aggregated turnover.
So if you want to take advantage of IAWO now could be the time to act as the ATO website states that from 1 January 2021, businesses with turnover of less than $10m will be eligible for IAWO and the threshold for assets, $1,000
To confirm if your business and the truck you intend to purchase are eligible, refer to the details at ATO website and/or discuss the situation with your accountant.
IAWO-suited Truck Loans
While having that conversation with your accountant, it is advisable to also discuss the most suitable loan type for your business set-up. Rent to Own and Truck Leasing are very popular loan products with our Jade Truck Loans customers. However, under this type of finance structure, the truck would not be eligible for the IAWO.
When discussing your finances, it's worth exploring the best truck loan type that aligns with your business structure. While Rent to Own and Truck Leasing are frequently sought after by our clients, these finance structures won't make your truck eligible for the IAWO.
Why? Both are 'off balance sheet' facilities, meaning the asset isn't on your company's balance sheet but on the lender's. To leverage IAWO, the asset must be on your company's sheet.
A Chattel Mortgage for truck purchases is an 'on balance sheet' facility. Hence, trucks financed this way would qualify for IAWO, provided all other requirements are met.
If you’re not totally familiar with this type of loan, Chattel Mortgage features include:-
- Our Jade cheap interest rates which are fixed for the finance term.
- Fixed finance term and fixed repayments.
- GST on the full purchase price of the truck can be claimed on the BAS return following purchase.
- As GST has been claimed in full up-front, GST is not applied to the repayments or the balloon.
- The full repayment and balloon are not tax deductible, only the interest portion is deductible.
- Depreciation is realised at end of financial year in accordance with ATO regulations.
With 31 December 2020 approaching, now could be the time to speak with Jade Truck Loans about a Chattel Mortgage for your truck purchase if you want to realise the benefits on offer from the Instant Asset Write-off measure.
For a quote on refinancing or a Chattel Mortgage for a new truck purchase, contact Jade Truck Loans 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.
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