Running a business takes a hell of a lot of blood, sweat and tears to keep things running like a well-oiled machine. Throw a spanner like COVID into the works and things can become even more stressful and strenuous.
Thankfully, there are a few awesome initiatives the Australian Government has implemented over the past year that ease a bit of the stress and help business owners get through things a little easier. One such incentive that’s proved immensely popular across the board has been the Instant Asset Write-Off scheme, enabling business owners and sole traders to immediately deduct the purchase of a new business asset such as a new vehicle from their taxable income over a single financial year. This of course was a much more attractive benefit than what was previously in place for work vehicles; depreciating the cost over 5 years.
At the end of 2020, the Instant Asset Write-Off scheme was replaced by the Temporary Full Expensing (TFE) scheme. But what is the TFE and how can it benefit your business?
The 5 most common FAQs of the Temporary Full Expensing (TFE) scheme
Q: What’s the difference between the Instant Asset Write-Off scheme and the Temporary Full Expensing scheme?
A: Ultimately, there is no huge difference between the two schemes (chat with your accountant if you want to learn the intricacies, though - it involves R&D claiming if you’re eligible).
Like the Instant Asset Write-Off scheme, the TFE scheme gives eligible businesses the ability to immediately deduct the entire purchase cost of a depreciating asset of almost any value (vehicles defined as a ‘passenger car’ have a limit of $60,733). This deduction can be made in its entirety in the first financial year after purchase/first use/installation.
And with the Federal Budget announcements earlier this year including a 12-month extension of the TFE scheme, you’ll be happy to know it will continue all the way through to June 30, 2023.
Q: What do I need to do to qualify for the TFE scheme?
A: If you run a business that turns over under $5 billion per year, congratulations - you’re eligible for the TFE scheme!
Businesses that have a turnover above $5 billion may still be eligible depending on a few factors outlined by the ATO here.
Q: Is there a limit to how much I can claim on a work-related vehicle purchase?
A: As stated previously, if you’re planning to purchase a vehicle that falls within the ‘passenger car’ category, your claim limit is $60,733. The ATO defines a passenger car as one that carries under 9 passengers and allows loads of under one tonne.
However, if you’re after a commercial vehicle such as a ute, truck or van you’re free to deduct the full amount - however much that might be - which is a nice change from under the Instant Asset Write-Off scheme which limited such deductions to $150,000.
Finally, there are no limits to how many business assets either. So if you’ve been thinking about upgrading or adding a few commercial vehicles to your current fleet, there’s never been a better time! If you want the best finance deals for your new commercial vehicle(s), get in touch with us now on 1300 787 288.
Q: Is the purchase and installation of vehicle modifications eligible to be claimed?
A: Absolutely! So if you decide to purchase, say, a new ute for work purposes which is eligible for the TFE scheme and would like to have a bullbar installed and add a toolbox in the tray, you’re able to claim everything - even if you end up getting it all installed sometime down the track.
Q: Does the TFE scheme only apply to work-related vehicles?
A: Not at all. The TFE scheme encompasses all business asset purchases, from utes and vans through to machinery and other commercial equipment.
At Stratton Finance, our experience spans not just vehicles but also commercial equipment and much more, so whatever your business financing needs might be, have a chat with our friendly team today.
Finance your next commercial vehicle with ease at Stratton Finance
If you’re ready to get the ball rolling and arrange finance for your new commercial vehicle and/or equipment, you’ve come to the right place. Stratton Finance has over 20 years of experience in the finance industry under our belt, and we’ve helped countless business owners like you around Australia secure the best commercial vehicle and equipment finance deals. Discover just how low your monthly repayments could be using our handy online car loan calculator, and if you like what you see you can apply online - it takes under 5 minutes!
Don’t have time to spend hunting for the hottest sale price? Our industry partners over at carconnect have you covered there. Simply let them know the make and model you’re after and they’ll do all the legwork for you, tapping into their massive dealer network to find you an amazing price. They can even arrange to have it delivered directly to your workplace.
Disclaimer: Nothing in this article should be assumed as personal advice. You should consider whether the information is appropriate to your needs, and where appropriate, seek advice from a professional financial adviser.