As a part of the Federal Government’s recently announced Economic Stimulus Package the instant asset write-off (IAWO) threshold has been increased from $30,000 to $150,000 and has now been extended to 31 December, 2020.
Businesses with an annual turnover of less than $500 million can access this tax deduction incentive. The Prime Minister said this would give businesses the “confidence” to go ahead and purchase and install equipment “because they will be able to write-off completely, 100%”.
This presents an ideal opportunity for businesses to instantly asset write-off rooftop solar systems of up to $150,000 purchased before the end of the 2020 calendar year.
‘Backing Business Investment’ is another new federal government incentive that accelerates depreciation deductions for eligible assets acquired from 12 March, 2020 and first used and installed by 30 June, 2021.
Businesses with a turnover of less than $500 million are able to deduct 50 percent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Planet Ark Power can provide finance chattel mortgage solutions (note a finance lease will not work with this incentive) to assist in the procurement process and optimise your cash flow. The chattel mortgage is a conventional method by which Australian businesses finance their assets. It is a commercial finance product where a financier lends the money to buy an asset and the customer makes regular payments as agreed with the financier. The customer assumes ownership of the asset, but the financier has a mortgage over it until the loan is paid.
This solution will also be applicable to assets of $150,000 or less for an extra year once the $150,000 Instant Asset Write-off has expired on 31 December, 2020.