New business equipment? It pays to plan ahead for EOFY

New data from the Commonwealth Bank shows small and medium businesses across the nation are gearing up for the future, with demand for equipment and machinery financing up 87% for the first six months of the current financial year compared to the same period in 2020/21.¹

Adding new equipment to your business, or replacing worn or outdated equipment can support productivity gains. It could also deliver valuable tax breaks.

The last Federal Budget saw the Morrison government extend a tax break known as ‘temporary full expensing’ (TFE) through to mid-2023.² It lets businesses claim the business-related cost of eligible capital assets in the current financial year instead of depreciating the cost over time.³ That adds up to a bigger tax deduction, and handy savings on tax.

Is your business eligible? 

To be eligible, a business must have turnover below $5 billion.⁴ So, pretty much all small businesses should be able to take advantage of TFE. That said, it’s essential to speak with your tax adviser to be sure you can claim an instant write-off of any equipment purchased.

If your budget is tight, secondhand equipment can be claimed under TFE as long as your annual turnover is below $50 million.⁵

The key challenge

The catch is that the asset must be in place and ready to go in order for a business to claim the cost through TFE in the current financial year.⁶ And that’s where the challenge can lie.

As many business owners would know, the COVID-19 pandemic has created supply chain issues.⁷ So equipment ordered close to 30 June may not arrive in time to be eligible for TFE in the current financial year.

This makes it worth getting in early. 

The solution

Your Mortgage Choice broker can’t get equipment supplies moving faster, but what we can do is help you secure the finance needed to fund an investment in new plant and equipment. 

We can explain the different varieties of financing available, help you decide what’s best-suited to your needs, and assist with the application process. It lets you focus on running your business, while we get going with the funding you need.

The end of the financial year can creep up quickly. So speak to your Mortgage Choice broker today for help arranging finance that gets your business growing.