For marine operators planning to purchase new boats for a rental or hire fleet, charter vessels, workboats or any other type of boat for your business – there is good news! Some business owners were not in a position to realise the benefits of the Government’s Instant Asset Write Off (IAWO) stimulus measure by the deadline of 30 June 2020. If you are in that category, the news is good as the deadline for the initiative is now 31 December 2020. That’s a 6 month extension to put your investments plans into action and possibly take advantage of the IAWO.
IAWO measure was announced in March by Prime Minister Scott Morrison as part of the coronavirus business stimulus package. At that time we posted an article covering the detail and with this updated news, we’ll update the story so you’re across what’s involved.
IAWO Stimulus Measure
Prior to the COVID-19 crisis, the tax regulations allowed businesses to claim a tax deduction, ie write-off, business asset purchases, ie boats, to a threshold limit of $30,000.
In response to the economic crisis caused by the coronavirus, the Australian Government launched a business stimulus package for business in March. A component of the package was increasing the IAWO threshold from $30,000 to $150,000 for businesses with $500m annual turnover. But the deadline was set at 30 June 2020.
However, while the business community welcomed this measure, as the pandemic crisis played out, it was clear that a lot of businesses would not be able to enjoy the benefits, due to the timing.
The COVID-19 restrictions forced many businesses to close and many others closed as a result of the downturn in business as their customers, ie the population, were under health orders to ‘stay home’
With no clear timeline for when the situation would return to any level of normalcy, many businesses had to put their investment plans, ie to buy new vessels, on hold. They were reluctant or not in a confident financial position to make the necessary purchases prior to the 30 June deadline.
Then as restrictions were lifted much sooner than expected and consumer confidence bounced back, many businesses found themselves better placed to proceed with investment plans but not by the 30 June deadline.
Deadline Extended 6 Months
In recognition of the situation, the Government announced an extension of this IAWO measure to 31 December 2020. Effectively giving marine businesses an additional 6 months to be eligible for increased tax deductions by purchasing boats, either used or new vessels, and having them operational in their business by 31 December, rather than 30 June.
A joint press conference was held by Treasurer Josh Frydenberg and Senator Michaelia Cash where they issued a statement announcing the extension allowed businesses more time to acquire and install assets as well as improve cash flow by bringing forward the tax deduction.
It is designed to support businesses adhere to their initial investment plans while also supporting the wider economy through the purchase of these assets.
What it may mean for your business
If you did have plans to purchase new boats but had shelved them temporarily, now may be the time to take those plans ‘off hold’. You now have that additional 6 months, till 31 December, to source the boat(s) you want, organised your Jade Boat Loans and finalise the purchase to take advantage of the IAWO.
If you’re in the charter or hire business, being ready before the summer holiday season may also dovetail nicely with your business model and hopefully, with a surge in tourism after prolonged border closures and lockdowns.
Another incentive to start purchase plans now is the usual EOFY sales and clearance offers. Many boat dealers, especially those selling new boats, suffered as a result of COVID-19 and will likely be itching to move stock quickly!
The IAWO only pertains to business boat purchases not personal boat buyers. The measure applies to each asset so a business may acquire a number of boats to be eligible for the IAWO.
In the original IAWO fact sheet issued in March by Treasury, several case studies were detailed which could help you get your head around how IAWO may benefit your business. Consult with your accountant as to which commercial boat finance product is best to suited to your business while taking advantage of the IAWO initiative.
Sourcing Effective Marine Finance
Jade Boat Loans offers businesses the full choice of commercial boat finance products for the purchase of boats for their business. These include Boat Leasing, Chattel Mortgage and Marine Commercial Hire Purchase (CHP). We refer you to the specific pages of our website for the details of each of these. After your discussion with your accountant, simply advise your Jade Boat Loans consultant which particular finance product you require and they can source you a cost effective quote.
Your Jade Boat Loans consultant will know you want to move swiftly to capture both any EOFY deals and make the IAWO deadline and is in a position to arrange fast marine finance approvals.
To discuss the options for your business boat finance requirements contact us on 1300 000 003 to speak with a Jade Boat 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.