As the end of the financial year (EOFY) approaches, it’s essential that you’re up to date on all the important information related to automotive tax incentives, particularly if you’re operating or working in a small business that can save you thousands on the purchase of a business car, ute or van.
Combined with record low-interest rates, the Australian government has also made some key changes that have extended the window in which buyers can claim a work vehicle for tax purposes, resulting in some of the most attractive conditions for the buying public we’ve seen in decades.
One thing to keep in mind, though, is that the current market conditions mean that you should actually get your order in well before the end of the financial year, due to supply constraints translating to extremely long waitlists. This could result in your car not arriving in time for you to write it off for that financial year.
With that in mind, let’s talk about why now is the perfect time to order your business car before the EOFY approaches.
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Get the Best Price on Your Trade-in
One thing to be keenly aware of in the lead-up to the 22-23 EOFY, in particular, is just how competitive the second-hand car market is, and how that can benefit you while upgrading your business car - if you’re quick enough to take advantage.
Prices for trade-ins and second-hand car sales have never been more attractive for the seller, due to production shortages and waitlists for popular vehicles that have driven second hand car prices through the roof.
This also gives you, the buyer, some added leverage while you’re negotiating the value of a trade-in of your vehicle to upgrade into a new business car.
If you’re looking for the easiest way to get a hassle-free quote on the trade-in value of your current car, click here.
Potential Tax Benefits
Purchasing a work vehicle as the end of the financial year approaches is one of the simplest ways to receive what’s known as an instant asset write-off, for those that are eligible. The news gets even better when you look at the changes to the scheme in recent years for businesses earning less than $5 billion a year.
The most recent 21-22 Federal Budget increased the threshold for the instant asset write-off program, which has since been extended until the end of the 22-23 financial year. This was a strategic move from the government to alleviate financial stress for small business owners and the commercial sector, alike.
This asset write-off allows you to claim the depreciation amount on that vehicle, which means that purchasing a new work vehicle in the lead-up to the EOFY can result in an expense deductible, otherwise known as a tax deduction, valued up to the threshold of $59,136 for the current 21-22 tax year.
For the 22-23 tax year, the government has confirmed that the depreciation limit will be increased to $60,733, but it’s important to take note that this figure includes on-road costs and stamp duty of the work vehicle being purchased.
To find out more about stamp duty, you can read our helpful guide here.
Pay This Financial year
On a similar note, upgrading into a new business vehicle ahead of the EOFY means that you’ll be paying for, and subsequently reducing your taxable income for the current financial year, which can help you reduce your tax bill.
Temporary full expensing, otherwise known as the instant asset write-off, means that the government is more than happy for you to purchase that new work vehicle and claim the value of its depreciation over time immediately for the previous tax year.
You also stand to benefit from record low interest rates and other market conditions that are currently favourable to you, as a buyer.
As we mentioned at the beginning of this piece, though, current market conditions show that you should get your order in well before the end of the financial year, so you can receive your car and the tax invoice that you can put to use this financial year.
Get a Head-Start on Waiting Lists
The Covid-19 pandemic has resulted in a number of wide scale production slowdowns and shortages of key components, like the hundreds of microchips that are fitted to each and every vehicle.
As a result, there are huge waiting lists for the most popular cars here in Australia that are seemingly growing by the day. Cars like the LandCruiser 300 Series, for example, have waitlists that have grown from nine to eleven months, with no respite in sight.
Putting down your deposit and making a purchase ahead of the changing financial year not only helps with all the points we’ve mentioned above, it also helps you get a head-start on waiting lists.
If you’re not quite sure of the options out there for your next business car, we can help. Click here to discover our car buying service that connects you with industry experts.
We Can Help You Get the Vehicle Your Business Needs
If you’re looking to trade-in your current business car and upgrade into the vehicle of your dreams, get in contact with OnlineAuto to see how we can help to find and secure the best price for your dream car, and get you an attractive trade-in price.