Acquiring a new truck should translate into tangible enhancements in productivity and efficiency for a business, which in turn are manifested as bottom-line improvements and increased profitability. However, it's worth highlighting that additional financial advantages can also be reaped by capitalizing on available tax measures during specific periods. The choice of truck loans, therefore, assumes a pivotal role in realizing these tax benefits.
In the ongoing financial year 2021/22 and extending into the subsequent financial year 2022/23, eligible businesses have access to temporary full expensing and instant asset write-off for the acquisition of qualifying assets. In order to effectively leverage the advantages of accelerated asset depreciation, making the right choice in truck loans is of paramount importance.
Both temporary full expensing and instant asset write-off essentially entail accelerated asset depreciation. To meet the eligibility criteria, the assets being acquired—in this context, the trucks—must qualify as depreciable assets, thus warranting asset depreciation within the company's accounts. Consequently, the choice of finance becomes crucial. Chattel Mortgage stands out as a highly suitable option for financing trucks for businesses intent on harnessing the benefits of these prevailing tax measures. This strategic alignment not only amplifies the financial returns of the truck acquisition but also optimizes tax-related advantages.
Temporary Full Expensing: Explainer
Temporary full expensing (TFE) is an accelerated asset depreciation measure which is introduced by government at various times. The reference to ‘temporary’ meaning it is only in place for a temporary timeframe.
Currently, the measure was introduced to support business during the pandemic and encourage investment through asset acquisition to stimulate the economy. It enables a business that meets the eligibility criteria to claim an immediate tax deduction for the purchase cost of assets that also meet the criteria. Immediate meaning in the tax year of purchase.
This differs from the tax benefits which can be realised by the purchase of depreciable assets under the normal ATO schedule. That allows for only a portion of the purchase to be deducted each financial year over several years.
Businesses with a turnover less than $5 billion are eligible, which covers the majority of Australian business. Criteria for assets includes that it must be purchased after October 6 2020 and in operation in that business by 30 June 2023. The deduction can be claimed in the financial year of purchase. The deduction is factored into the preparation of the business income tax return and the end of the financial year.
The ATO has recently released additional information – the Law Companion Ruling 2021/3 regarding temporary full expensing which covers a range of topics. Business owners will no doubt wish to consult with their accountant on whether or not temporary full expensing on a truck acquisition is suited to their business.
Chattel Mortgage Truck Finance
Key to meeting the stipulations for this tax measure is that the truck, serving as the asset, must qualify as a depreciable asset. This is where the selection of the appropriate truck loan type becomes crucial. The chosen finance arrangement should facilitate the inclusion of the truck within the business accounts as an asset/liability, rendering it eligible for depreciation. Among the options, Some Possible Benefits Of Chattel Mortgage Finance emerge, aligning seamlessly with this objective and supporting the eligibility for the tax measure.
With Chattel Mortgage Truck Finance, the ownership of the vehicle is transferred to the borrower when the sale is finalised and the finance is settled. With ownership held, the truck becomes a depreciable asset and subject to depreciation schedules.
This differs from Truck Lease Finance and Truck Rent-to-Own where the lender retains the ownership of the truck.
Subject to being suited their business, Low Docs and No Docs Truck Loan applicants and businesses requiring Bad Credit Truck Loans can apply for Chattel Mortgage truck finance and proceed to consider opting in to temporary full expensing.
Full coverage of the features and benefits of Chattel Mortgage can be accessed right here. Businesses should also discuss with their accountant whether this or another of our truck loan products will best work to achieve their specific financial objectives.
Quick Truck Loan Deals pre-EOFY
If the combination of Chattel Mortgage and temporary full expensing aligns with your business objectives, there's still an opportunity to reap the benefits within this fiscal year. Our dedicated consultants are poised to expedite the process by sourcing quotes promptly, expediting application approvals, and facilitating seamless settlements. This strategic approach ensures a streamlined and expeditious journey toward acquiring both the truck and the necessary finance.
Acting swiftly presents an additional advantageous dimension concerning the prevailing interest rate landscape. Chattel Mortgage stands out for offering the most competitive rates among the array of truck loan options. Given that lenders are influenced by decisions made by the Reserve Bank of Australia (RBA), it's highly probable that the RBA will institute further rate hikes in the approaching months. By taking prompt action, the potential to secure substantial interest savings over the lifespan of the truck loan becomes evident. Embracing this opportunity not only aligns with immediate tax benefits but also positions your business for long-term financial prudence.
Contact Jade Truck Loans on 1300 000 003 to discuss quick action on securing a Chattel Mortgage truck loan to acquire new vehicle prior to 30 June.
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.