Instant Asset Write-Off COVID-19 Stimulus: What it means for truck buyers

Many sectors of the economy have taken an enormous hit as a result of the coronavirus pandemic. But while COVID-19 is responsible for many negative impacts on businesses across multiple industries, it has highlighted the importance of the trucking and transporting industry.

The transport sector has been hailed as an essential service in many sectors, especially trucks delivering food, medical supplies and other goods around the country. While some sectors are struggling with businesses forced to close, others are seeing increased demand for trucking services.

As bricks and mortar establishments have closed or seen reductions in trade they’ve moved further into the online space which has increased demand for delivery services. Panic-buying in some areas has highlighted the importance of streamlined supply lines for essential goods across the country.

The trucking industry has long been under pressure and many operators will welcome the increase in business and even further welcome the stimulus measures available to support their business.

Unpacking IAWO – Instant Asset Write-Off

• Since early March, Prime Minister Scott Morrison has announced a number of stimulus packages, support measures and recovery plans to support businesses through the COVID-19 crisis.
• Included in one of the first stimulus packages was the Instant Asset Write-Off initiative.
• IAWO is designed to be a time-limited measure, over 15 months, as a short-term boost to the economy.
• Businesses that have an aggregated turnover of up to $500 million as at 30 June 2020 are eligible.
• The measure increased the IAWO from $30,000 to $150,000 on new asset purchases, eg trucks.
• The trucks need to be purchased and in use by 30 June 2021.
• It applies on a ‘per asset’ basis so you may consider purchasing more than one truck to take advantage of this initiative.
• To read all the details and review a number of examples, refer to the official Government Fact Sheet.
• As with all major financial decisions, we strongly advise that business owner discuss their specific requirements with their accountant.

Which Truck Finance Applies to IAWO?

• Instant Asset Write-Off enables businesses to depreciate a greater percentage of their truck purchase than at current levels. In order to depreciate an asset, it must of course, appear on your balance sheet.
• Truck Leasing and Truck Rent to Own are off-balance sheet finance products. When you take out this type of finance, your truck appears on the lender’s balance sheet. As it does not appear on your balance sheet, you can’t claim the depreciation.
• By comparison, both Commercial Hire Purchase (CHP) and Chattel Mortgage are on-balance sheet finance facilities. So if you purchase a truck with a value between $30,000 and $150,000 with either CHP or Chattel Truck Mortgage, you may be eligible for the IAWO.
• While this stimulus measure is clearly attractive to and will benefit some truck businesses and owner-operators, it may not be right for everyone. The advantages from leasing or rent to own may be more significant to your business.
• Discuss the options with your accountant.

Support from Jade

Once you decide which way you want to go with your new truck finance, Jade Truck Loans will be supporting you throughout the entire loans process. We have transitioned many of our team to a work from home operation to comply with COVID-19 physical distancing.

But our business model is not greatly impacted by this change and we will be maintaining continuity of our truck loan service. That means cheaper truck loans interest rates.

So if you’re in the market for a new truck to expand your business, replace an existing truck or to get into the market, contact us to discuss a loan. We’ll be ensuring swift approvals and quick loan application processing through the COVID-19 crisis.

To discuss the options for your truck finance requirements contact us on 1300 000 003 to speak with a Jade Truck Loans consultant.

DISCLAIMER:THE INFORMATION PROVIDED IS FOR GENERAL CONSIDERATION. ANY REFERENCE TO OFFICIAL GOVERNMENT POLICIES HAS BEEN SOURCED FROM AUSTRALIAN GOVERNMENT AND STATE GOVERNMENT SOURCES. NO LIABILITY IS ACCEPTED FOR ANY ERRORS IN PRESENTATION OR INTERPRETATION OF THE FACTS AS PROVIDED BY THESE SOURCES. WE ADVISE ALL INDIVIDUALS AND BUSINESSES TO REFER TO THEIR ACCOUNTANT OR FINANCIAL ADVISOR FOR PROFESSIONAL ADVICE SPECIFIC TO THEIR INDIVIDUAL CIRCUMSTANCES.