Are you running out of time to take up government incentives?

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  • Earthmovers & Exacavators

This article is brought to you by Savvy Finance

Are you running out of time to take up government incentives?
December may be the best time to buy for a while


2020 has been hard for all Australians from all walks of life. When our governments imposed restrictions around COVID-19, the Federal Government recognised the need for stimulus and incentives to keep the economy primed.

Many of these stimulus packages were direct, such as JobKeeper and JobSeeker, which put money into the pockets of out-of-work Australians. Other stimulus was indirect, such as an increase in the instant asset write-off and other guarantees.

Nothing lasts forever and you are running out of time to take up these government incentives. If you are eyeing off a new earthmover, excavator, or farm machinery and want to take advantage, you need to get moving quickly.

Here are the government incentives on offer and when they expire.

The Instant Asset Write-Off

The Federal Government offers a tax write-off on business asset purchases and increased the instant asset write-off to $150,000 until the 31st of December 2020.

This means you can claim $150,000 as a tax deduction if you buy construction equipment such as bulldozers, earthmovers, or excavators instantly – and you can buy multiple assets and qualify for the write off. As with anything to do with the tax department, there are conditions. Click here for the full list and information.

SME Coronavirus Guarantee

This incentive is geared toward giving small and medium businesses access to business finance.

The government will guarantee any business loan worth up to $1 million over a five-year term.

This means some eligibility criteria may be waived due to the government acting as guarantor. You will also have to approach a participating lender.

The loans are even more appealing as the interest rate is at a record low 0.1%p.a. Phase Two of this scheme, which began in October 2020 will close on 30 June 2021.

Is this the best time to buy?

According to Savvy managing director and business finance expert Bill Tsouvalas, the month of December may be the best time to buy construction and other heavy plant for an exceptionally long time.

"We’re in perfect conditions for business purchases – a high asset write-off threshold, extremely low interest rates, and guaranteed loans. If you are hesitant about pulling the trigger on a new purchase, don’t. This is as good as it’ll ever get," he says. 

Opting for chattel mortgages or hire purchase also give you access to further write-offs, Tsouvalas says. "You can claim the GST paid on your purchase, interest paid, and claim depreciation. You can also borrow more than the value of the item, so you won’t have to put any money down and pay off rego, insurance, and other costs over time. You can also put in balloon payments and vary your repayment terms, if you are a seasonal business. It’s a very flexible product. Coupled with the SME Guarantee, you could save a lot. It’s best to consult a broker instead of trying to find a participating lender – it will save you a lot of time and headaches."

"No matter what you choose, you need to get on this as soon as possible."

Remember to consult a financial adviser before making any major financial decision.

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