While many individuals focus on the tax deadline of June 30th each year, astute operators understand that tax considerations are a year-round affair, commencing even before July 1st. It's more like a marathon than a sprint, achievable with consistent effort. By the time June 30th arrives, most business expenses for the year have been accounted for. Although some final purchases can still be made to lower taxable income and accountants might make adjustments, the core figures are already in place.
To ensure you maximize tax opportunities, it's crucial to pay attention to significant acquisitions like trucks throughout the entire year. The choice of loan type used to finance a truck can have substantial implications for the business's tax benefits. If you've never viewed 'tax time' as a continuous 12-month period, now might be the ideal moment for a change in perspective as the new financial year begins.
EOFY Truck Finance Opportunities
The end of the financial year (EOFY) often brings about enticing opportunities, particularly in the form of sales events. Numerous manufacturers and suppliers leverage this annual sales extravaganza to provide discounts on trucks and various equipment, as well as exclusive deals to entice buyers and clear out their inventory. While the last week of the financial year saw some states under lockdown, potentially limiting purchasing activities, several sale events might extend into July or until stocks are depleted.
Taking advantage of these opportunities could grant you access to a reduced price on a new truck, thereby freeing up funds that can be allocated to other essential needs.
Made a loss? No worries!
Under the measures announced in the Federal Budget, businesses that made a loss in the 20/21 financial year could be in line for an actual cash refund. Loss Carry Back Tax Offset allows eligible businesses to carry losses made in some financial years (19/20, 20/21, 21/22) back and claim against profits made in earlier years. If tax was paid in the profit-generating years, that tax is refunded.
If your business has faced challenges stemming from COVID-19 or other economic setbacks, there might be a glimmer of hope and a financial infusion to kickstart your plans for the upcoming year. However, it's worth noting that this approach can also be strategically employed when contemplating the acquisition of a new truck.
We’ve covered how loss carryback can work in a business’ favour in regard to the purchase of a new truck in a number of articles, but we’ll recap if you missed it. If you purchased a truck during 20/21 with Chattel Mortgage truck finance under the Instant Asset Write-Off or temporary full expensing measures, the full value/price of the truck could be written off in that financial year. All subjects of course to eligibility criteria.
Incorporating such a substantial expenditure into your business financial records could potentially lead to your business reporting a loss for the year. This loss may subsequently be used to offset tax payments from a previous year. Both temporary full expensing and loss carryback initiatives are active in the current financial year for qualified asset acquisitions and eligible businesses. Consequently, if you're contemplating the acquisition of a new truck within this year, giving thoughtful attention to the tax advantages linked to financing could yield substantial benefits.
Do you know what accounting method your business implements? Many business owners leave all that to their accountant and just go with the flow, often over many years. But with the current temporary full expensing measures in place, it may be time to look into this aspect of your business.
There are two types of accounting methods – Cash Accounting and Accruals Accounting. The key difference is in the timing of when income and expenses are posted to the accounts. But they also affect the suitability of loan types and that can flow through to realising some tax benefits through truck loans.
Chattel Mortgage is widely regarded as the most appropriate loan type to leverage the benefits of temporary full expensing. However, it's essential to note that Chattel Mortgage aligns best with the cash accounting method. Businesses adopting the accruals accounting method might not be able to fully capitalize on these advantages.
The accounting method chosen by a business can be altered, but the change must remain consistent throughout the entire financial year. Hence, if your business currently employs the accruals method and you're contemplating a switch to the cash method to take advantage of the synergies between Chattel Mortgage and temporary full expensing, the start of the financial year provides an opportune time to consult your accountant about the possibility of making this transition.
Maximising Truck Loan Opportunities
It's a prime moment to delve into the strategies that allow you to harness the full potential of the prevailing opportunities and determine the essential vehicles required to capitalize on the situation. Recently unveiled state and territory budgets have highlighted substantial investments in infrastructure, construction, and building projects. These ventures hold promising prospects for individuals and businesses engaged in operating crane trucks, excavator trucks, dump trucks, materials handling trucks, and various other models. These projects can open doors to lucrative work contracts; however, you might find yourself in need of new vehicles to fully seize these prospects.
Purchasing new trucks with the cheapest and most appropriate truck loans can set your business up, not only to successfully bid and complete the work on offer but to realise the tax benefits as cost savings.
Jade Truck Loans offers the full range of truck finance options to suit all types of business operators including those requiring low docs and no docs loans and those with credit issues.
Our truck loans include:-
All have tax-deductible elements which you are invited to review on our product web pages.
Furthermore, we prioritize fixed interest rates across all our truck finance packages, always ensuring the lowest attainable rate. The Reserve Bank of Australia (RBA) maintained its historically low interest rates during its July 2021 meeting. However, the duration of these favourable rates is uncertain. Some economists speculate that the RBA's reduction in bond buying may precede an earlier cash rate cut.
In safeguarding your business against potential increases in lending interest rates in the coming years, you can secure a truck loan at our fixed rate. Opting for a 7-year loan with our competitive interest rates now allows your business to enjoy the benefits of a low interest rate over the entire 7-year loan term, regardless of any future shifts in the official cash rate or lending rates.
While there are numerous strategies that business owners can implement to ensure they capitalize on tax benefits, it's crucial to consider these actions throughout the entire financial year, rather than just during the rush to meet the 30 June deadline. To explore how we can help your business leverage tax benefits through cost-effective truck loans, don't hesitate to have a confidential discussion with one of our consultants.
Call 1300 000 003 for a quote to set your business on a good road through 2021/22 and beyond.
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.