Ute Buyers Rush to Take Advantage of June 30 Deadline for Instant Asset Write-Off in 2023-24 Federal Budget

Ute buyers and tradies in Australia are scrambling to take delivery of their work vehicles before the current tax break expires. The Instant Asset Write-Off tax break, which allowed companies with a turnover of up to $5 billion to claim business assets up to $150,000 as a work expense in the same financial year, will end on June 30, 2023. After that, a new scheme will cap the purchase of work vehicles at $20,000, and the tax deduction must be spread over three financial years. The changes have put pressure on small businesses to get a new work vehicle before the deadline amid stock shortages, production slowdowns, and shipping bottlenecks.

Under the current scheme, the cap on new or used motor vehicles is $65,000 for the 2022-23 financial year. However, the cap will drop significantly in the new scheme, causing many businesses to rush to purchase work vehicles before the deadline. The list of eligible vehicles will also shrink dramatically, making it harder for businesses to find suitable vehicles that qualify for the tax break. Only vehicles that cost less than $20,000 can be claimed in the same financial year, and the deduction can only be applied to the work portion of the vehicle expenses.

The Instant Asset Write-Off scheme was introduced in 2011 to boost the economy after the Global Financial Crisis. The new scheme will only apply to businesses with a turnover of up to $10 million, making it harder for larger businesses to claim the tax deduction. The changes mean that businesses will need to plan their vehicle purchase more carefully, ensuring they can get the best tax deduction while still finding a suitable work vehicle for their needs.

There are only a handful of new cars priced below $20,000, including the Kia Picanto and MG 3 hatchback. Used cars are also eligible if purchased as a work vehicle. However, finding suitable used vehicles may also be challenging, given the current market conditions. Businesses are advised to consult a qualified tax expert or accountant for more detailed information on how the changes will impact their business and individual circumstances.

In summary, ute buyers and tradies in Australia are facing a race against time to take delivery of their new work vehicle before the Instant Asset Write-Off tax break expires. From June 30, 2023, a new scheme will cap the purchase of work vehicles at $20,000 and businesses will only be able to claim the tax deduction over three financial years. The changes have put pressure on small businesses to get a new work vehicle before the deadline amid stock shortages, production slowdowns, and shipping bottlenecks. Businesses are advised to consult a qualified tax expert or accountant to understand how the changes will impact their individual circumstances.

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