Farmers and rural businesses have welcomed the extension of the Federal Government's asset write-off scheme. Worth up to $150 000, the Scheme is seen as an important measure for the industry and a major incentive to invest in assets which will improve productivity for the rural sector.
The Scheme was expanded from $30,000 to $150,000 in March 2020, to support businesses as part of the Federal Governments' Economic Stimulus Package in response to COVID-19. It has now been extended until 31 December 2020 and includes:
- an increase in the threshold for each asset from $30,000 to $150,000,
- an expanded eligibility to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).
The instant write-off has made buying both new and second hand equipment very attractive. Farmers can claim an immediate deduction for multiple assets, new or second hand, as long as each asset costs less than $150,000. It is important to note that assets need to either be first used or installed ready for use between 12 March 2020 and 31 December 2020, in order to claim the tax back.
Many farmers have already taken advantage of the Scheme and used the tax write off to buy new or used machinery, plant and vehicles priced within the $150,000 spending threshold.
Some farmers have been able to separate the machinery components out to ensure each item falls within the $150K cap. There is no limit to the number of equipment items a business can buy and claim against their taxable income.
Ben Millar from Emmetts has welcomed the extension to the Scheme, "The extended scheme will go a long way to improve confidence in the rural sector and is a recognition of the significant capital outlay that farmers make to run their businesses. The new 31 December 2020 deadline will also ease bottlenecks for equipment suppliers and manufacturers", he said.
There are some exclusions and limits to the Scheme. For example, a passenger car is limited to $57,580, where as a truck or commercial van has a higher limit. It will be important to seek professional tax advice prior to proceeding.
If you are interested in taking advantage of the extended asset write-off scheme, please contact Ben Millar, Finance Broker, who would be happy to answer any questions you may have or provide a quick quote.