The Australian Government has announced a number of stimulus packages to support businesses and individuals to deal with the impacts of the coronavirus crisis. One of the key inclusions of one of the first packages was the Instant Asset Write-Off (IAWO). This is a measure designed to boost investment and may be of interest to businesses that own and operate motor bikes in the course of the operations or for bike owners that use their ride for business purposes.
To support our Jade customers to fully understand the benefits and implications of IAWO, we’ve provided this explainer which covers the key points:-
• The threshold has been increased from the previous $30,000 maximum to $150,000 for IAWO of eligible assets for eligible businesses for a limited period.
• Businesses that are eligible are those that have an aggregate annual turnover of $500 million as at 30 June 2020.
• Eligible assets must be new assets and as designated as depreciable under Division 40 of the Taxation Act.
• Our opinion is that motor bikes used in the conduct of operating a business would be considered eligible assets.
• To be eligible for IAWO, these new assets must be purchased and ready for use by 30 June 2021.
• You can read more detail on the government-issued fact sheet at https://treasury.gov.au/sites/default/files/2020-04/Fact_Sheet-delivering_support_for_business_investment.pdf
If you’re considering the purchase of a new motor bike, this may be an initiative worth considering. As with all decisions of this kind, we advise you to consult with your accountant.
Financing a Bike for IAWO
While many businesses have been forced to close or wind down operations during the coronavirus crisis, Jade Bike Loans has been ‘business as usual’ and stand ready to assist you with your motor bike finance requirements.
Interest rates are currently at low levels and this may be an added incentive to act on a purchase at this time
When taking out a bike loan, in order to take advantage of the IAWO, you need to have an on-balance sheet finance facility. That is, Chattel Mortgage or Commercial Hire Purchase (CHP).
Motor bike leasing is an off-balance sheet finance product. The bike appears as an asset/liability on the balance sheet of the lender so, as the borrower, you would not be in a position to claim the asset write-off.
While the benefits of IAWO may seem appealing, they should be considered in light of the greater benefits your business may realise through a leasing finance product. These are conversations would you need to have with your accountant as they are dependent on individual circumstances.
There have been many changes to business and personal lives and lifestyles as a result of coronavirus. One has been in the area of online shopping, home deliveries and other retailers moving to direct-to-consumer business model.
These changes may represent opportunities for motor bike delivery services to expand their operations.
We will be keeping across developments and business opportunities as Australia enters the COVID-19 recovery phase and will be posting articles to update our customers accordingly. So stay connected with Jade Bike Loans.
To discuss your motor bike finance requirements, contact us on 1300 000 003 to speak with a Jade Bike Loans consultant.
DISCLAIMER:THE INFORMATION PROVIDED IS FOR GENERAL CONSIDERATION. ANY REFERENCE TO OFFICIAL GOVERNMENT POLICIES HAS BEEN SOURCED FROM AUSTRALIAN GOVERNMENT AND STATE GOVERNMENT SOURCES. NO LIABILITY IS ACCEPTED FOR ANY ERRORS IN PRESENTATION OR INTERPRETATION OF THE FACTS AS PROVIDED BY THESE SOURCES. WE ADVISE ALL INDIVIDUALS AND BUSINESSES TO REFER TO THEIR ACCOUNTANT OR FINANCIAL ADVISOR FOR PROFESSIONAL ADVICE SPECIFIC TO THEIR INDIVIDUAL CIRCUMSTANCES.