It has been a crazy, oh yes, unprecedented past 12 months due to the coronavirus pandemic, catastrophic weather events and a lot of other issues. Many business owners have had a lot on their agenda to deal with and attend to. But now the vaccine is rolling out, restrictions are being eased, some are talking a return to normalcy (what is that anyway) and the months roll on. It's Easter and by the time you’ve unpacked the camping gear from your getaway and dealt with school holiday duties, it will be nearly May. Well into the final quarter of the financial year. Those last few months when business people can start to panic or at least pay attention to ensuring they have all the financials and acquisitions in place for tax time.
While any EOFY is significant for business, this year is of particular note due to the raft of stimulus measures introduced by the Federal Government at various times through 2020. If you meant to do something about those, particularly purchase new business vehicles to take advantage of the tax measures and you haven’t quite got around to it – now could be the time to do it.
While our Jade Car Loans consultants can arrange motor vehicle finance promptly and efficiently, you may require time to consider the large selection of work vehicles currently on the market. The ute, dual cab chassis and SUV categories are particularly extensive with competitive pricing being offered by manufacturers and dealers. In the luxury sedan market, the ideal business car, BMW, Jaguar, Audi and Mercedes-Benz have exciting new 2021 models hitting the market.
Our Jade Car Loans team has been dutifully staying across the various taxation policies and measures as they relate to motor vehicle finance and we’ve posted numerous articles for our customers to reference. But as the EOFY countdown begins, we’ll give you a quick update and recap.
Don’t Write-off IAWO
IAWO, Instant Asset Write-Off was the buzz word for business asset purchases, especially vehicles, in 2020. The tax measure was used in promos by just about every vehicle dealer and lender, including Jade Car Loans, after it was implemented. But familiarity can cause oversight. We’re so used to seeing something we fail to notice it. Well, if you want to take advantage of IAWO in this financial year, the clock’s ticking, so it is time to take notice.
The scheme was tweaked and expanded and for some eligible businesses for eligible purchases, is available through to 30 June 2022. Some businesses and some asset acquisitions are also covered for similar tax breaks under temporary full expensing. Essentially a similar concept but with broadened scope.
The concept, in basic terms, when purchasing an eligible depreciable asset such as a business vehicle, instead of only being able to claim a small percentage as a tax deduction each year, the entire purchase price can be depreciated in the financial year of purchase.
The keyword is depreciable. If purchasing the vehicle under finance, the finance product needs to allow for the asset to be depreciated. Enter Jade Car Loans – it is considered that Chattel Mortgage is the most appropriate form of finance for those seeking to utilise IAWO.
Chattel Mortgage and Tax Deductions
The different finance products have variations in regard to ownership of the vehicle during the finance period. With Leasing, the lender retains the ownership and the borrower leases the vehicle from the lender. As the borrower does not have ownership rights, the vehicle is not considered as an asset/liability in their accounts and therefore, can’t be depreciated by the borrower. We should mention that Leasing does have other tax deductible benefits.
With Chattel Mortgage the vehicle is used as security against the loan and the borrower has ownership so the asset is entered on the borrower’s balance sheet and hence can be depreciated or written off in the books and suitable to realise the benefits of IAWO. Check with your accountant that this type of finance suits the accounting method implemented to prepare your company books and income tax returns.
Another attraction to Chattel Mortgage is the cheaper interest rate. Interest rates on commercial finance facilities vary and typically the cheapest rate applies to Chattel Mortgage. Another reason to get moving on that vehicle purchase before EOFY. Generate rough repayment estimates with our commercial car finance calculator.
Chattel Mortgage features:-
- Versatile form of finance which can be used for all types of business vehicles
- Available to all business set-ups
- Cheap business car finance rates
- No deposit finance available
- Balloon optional
- Pre-approved finance
If IAWO has been at the back of your mind over recent times and you’re keen to realise the benefits in this financial year, it could be time to move that idea into front of mind. Easier still, you select your car and just call Jade Car Loans to handle the finance side of things for you.
To start arranging business vehicle finance to capitalise on EOFY tax breaks, contact Jade Car Loans at 1300 000 003.
DISCLAIMER: IN REGARD TO MISREPRESENTATIONS AND ERRORS CONTAINED IN THE MATERIAL AS PRESENTED, LIABILITY IS NOT ACCEPTED. THE DETAILS AND CONTENT IS PROVIDED FOR CAR BUYERS AND INDIVIDUALS AND BUSINESS SEEKING FINANCE PURELY AS GENERAL INFORMATION. THIS IS NOT PROVIDED AS THE ONLY SOURCE OF FINANCIAL INFORMATION. ANYONE THAT CONSIDERS THAT NEED FINANCIAL ADVICE ABOUT THEIR SPECIFIC REQUIREMENTS SHOULD SEEK THEIR OWN FINANCIAL ADVISOR.