Got your eye on a new vehicle for your business? Thanks to the $150,000 instant asset write-off, you can now consider options such as easy truck loans. We have answers to the various FAQs business owners are asking as the EOFY deadline date approaches.
Need a new van for that delivery service for that your business has started or still you trust your old Ute? Loan Junction has made truck finance easy, and the truck finance experts will help you make a right choice.
Help all with cash flow amidst the coronavirus pandemic, the Federal government has increased the instant write-off threshold to a whopping $150,000 from mere $30,000. This scheme thus is an opportunity with which you can immediately write off the cost of assets, including new & second-hand vehicles, in one hit to claim the deductions rather than over the entire asset’s lifetime. This includes trailer financing and other vehicle purchases, making Loan Junction the ultimate preferred partner for Australia’s fastest truck finance solutions if you are considering a truck loan for your business.
However, there are important limits and exclusions for the vehicles under this scheme, recently clarified by the ATO. Here is a summary of their latest guidance
Vehicle Eligibility for instant asset Write-off and truck loans
Unfortunately, not. Let us go through the vehicle eligibility:
Generally, all the vehicles having a total cost less than $150,000, are eligible for instant asset write-off. While for the passenger Cars (cars designed to carry fewer than nine passengers & less than one tonne), the claimable limit is maximum of $57,581, unless the car is specially fitted for use by people with disabilities. If you are considering used truck loans or big truck loans, this rule stands relevant.
As the $150,000 threshold limit applies on a per asset basis, so the businesses can write off multiple eligible assets immediately. This greatly benefits the businesses looking for start-up trucking loans or any other type of truck loan.
Let us go through some of the case studies below for better understanding.
Instant Asset Write-Off for Larger Vehicles and truck loans?
The good news is that the $150,000 threshold also applies to heavy-duty vehicles such as big trucks, tractors, various machinery, and also one-tonne Utes. This scheme is also valid, in case you need truck repair loans or are searching for best truck loans near me. This scheme will make your journey of acquiring a truck loan easier and more accessible.
However, the total cost of the vehicle, including all the allied taxes, must be less than $150,000 for it to be eligible under this instant asset write-off scheme. This will help the businesses looking for truck loans, plan the that finances in a better way.
Claiming the cost of vehicles used for both private and business purposes with a truck loan
If you are using a car for both of your private & business use, the claim can be made only for the business part as the deduction is limited maximum to the business part of the car limit. Take for an example, if the car is being used only 50% for the business purposes, the maximum claimable limit for the same will be 50% of $57,581 (defined scheme limit). This is applicable to all vehicles financed under a truck loan scheme.
Impact of Late Delivery on Instant Asset Write-Off and Truck Loans
If you have ordered & paid for your car by EOFY, to qualify for the instant asset write-off, you must have first used your car or the car must have to be delivered and ready for use, between the defined dates. If you have not received your car by end of June, the claim cannot be made, thereby, affecting your truck loan plans.
Still scratching your head? The below shared ATO examples should help clarify further doubts (names tweaked for fun please).
Example 1: Darryl & Debbie buy a new luxury Car
Darryl and Debbie run Downlit Wines, a small winery & vineyard business on beautiful east coast of Tasmania. In March, they purchase an $80,000 luxury car designed to carry passengers to and from the Hobart and Launceston airports.
Since it is a passenger vehicle, so, the maximum amount they can apply for the write off is the car limit of $57,581, not the full $80,000. Furthermore, if they use this car for work purposes 50% of the time only, so they can only claim $28790.50 (50% of $57,581).
Further, the business cannot claim the excess cost of the car under any of the other depreciation rules. This is something that you need to consider while planning to finance it under a truck loan scheme.
Example 2: Darryl & Debbie buy a new Ute
At Downlit Wines, it is not all sommeliers & sipping. Darryl and Debbie also need some horsepower for the challenging work around the vineyard. In April, the business purchased a Ute for $65,000.
Since the Ute is not designed to carry the passengers, is equipped with all the necessary tools in the tray, and has a load capacity of over one ton, the car cost limit of $57,581 will not apply here.
This means the business can claim full deduction for an instant asset write-off, amounting $65,000, with the assumption that the Ute is being solely used for work purposes. This is a perfect example that how you can use the best truck loan option in a most cost efficient way.
Is your business eligible for Truck Loan and instant Asset Write-Off claims?
The asset write-off scheme is available to only those businesses with an annual turnover of up to $500 million, the earlier value was $50 million in the case. This makes availing truck loan even more viable for many businesses.
However, the vehicle must be used or ready for use by 30th of June, the last date is approaching fast. Availing truck loan under EOFY will facilitate timely acquisition and compliance with this requirement.
If you need any sort of assistance for obtaining truck finance to purchase the vehicle before the EOFY deadline, contact us today. We are a call away and ready to assist you with all your truck loan needs!
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