Australian Government stimulus package a boost for construction businesses

To help the economy and keep the construction industry moving forward through the COVID-19 pandemic, and after it, the Australian Government  announced a $17.6 billion economic stimulus package in 2020 that includes an increase of the Instant Asset Write-off (IWAO) threshold, the Backing Business Incentive (BBI) and a cash flow boost of up to $100,000 for small business.

We’ve put together the below information to help you plan and make decisions around purchasing new assets.

The Temporary Full Expense Provision (18/12/20)

From 7:30pm (AEDT) on 6 October 2020 until 30 June 2022, businesses with turnover up to $5 billion will be able to deduct the full cost of eligible depreciable assets of any value in the year they are first used or installed ready for use.

The cost of improvements made during this period to existing eligible depreciable assets can also be fully deducted.

Instant Asset Write-Off (IAWO)

What is changing?

• The upper limit for asset purchases has increased from $30,000 to $150,000 (ex GST), for businesses trading as a company this could result in a tax reduction of up to $45,000 in FY20-21.
• The eligibility for an IAWO has been increased to include all businesses with an aggregated annual turnover of less than $500m (up from $50m).

This means that an estimated 99 per cent of all Australian businesses are now eligible for an IAWO. So, if your turnover is under $500m, you’re good to go.

How long do I have?

18/12/20 - Eligible businesses that acquire eligible new or second-hand assets under the enhanced $150,000 instant asset write-off by 31 December 2020 will also have an extra six months, until 30 June 2021, to first use or install those assets.

Can I purchase multiple Cat® machines?

Yes, provided the total sum is under $150,000, you can purchase multiple machines and claim them all.

Does this include used Cat machines?

Yes, you can purchase a used (second-hand) Cat machine and access the IAWO.

Does this include Cat attachments?

Attachments can also be eligible for the IAWO including new buckets, blades, rippers, couplers and other Cat accessories.

I’ve recently purchased a Cat machine, am I still eligible?

• All machine purchases under $150,000 which were made from 12 March 2020 to 31 December 2020 will be eligible.
• 18/12/20 - Eligible businesses that acquire eligible new or second-hand assets under the enhanced $150,000 instant asset write-off by 31 December 2020 will also have an extra six months, until 30 June 2021, to first use or install those assets.

Backing Business Incentive (BBI)

The BBI is a new time limited 15-month investment incentive that will be introduced to help you by depreciating deductions. If you are planning on investing in a new Cat machine (not used) worth more than $150,000, the BBI will allow you to claim a deduction of 50% of its cost. This is valid until 30 June 2021.

Cash Flow Boost

The Cash Flow Boost is a tax-free payment of up to $100,000 to help you pay bills and retain staff. To be eligible, you must be an employer of staff (not a solo owner-operator) and have an aggregated annual turnover of less than $50m.

More Information

Please visit the Australian Taxation Office website for more information about the above stimulus measures.

In these challenging times you can be assured of the quality of Cat equipment and the support of WesTrac to keep your business operating effectively.

If you’re ready to take advantage of these incentives, please click below to make an enquiry.