Equipment purchasers stand to be one of the biggest winners from last week’s Federal Budget.
Customers who might have been borderline on investment decisions may now have a compelling reason to reconsider the capital expenditure purchase.
- The expansion of the Instant Asset write-off means that any depreciable asset purchased for business purposes prior to 30 June 2022 can be 100% tax deductible in that financial year. The previous $150K ceiling is gone and it now applies to all businesses with turnover of less than $5B per annum.
- The Temporary Loss Carry Back is a very clever way to enable businesses to potentially redeem tax that they have previously paid. This combined with the Instant Asset write-off, may potentially enable profitable businesses to also claw back some or all of the taxes paid from FY19 onwards. i.e. if a tax loss was made in FY20 it could be used to claim back income tax paid in the prior year.
- Finance is becoming cheaper. Record low interest rates combined with a strong AUD means that equipment is significantly more affordable.
- We are expecting to see an increase in skilled labour shortages, which is expected to get worse despite the expected increase in unemployment over the next year. As always, automation is becoming increasingly more important.
Customers will progressively be looking to their equipment suppliers to provide a finance offering as a part of their automation solution. The major banks have already started to make it harder for their customers to borrow money. Customers who had previously relied on their bank will be looking for help from trusted partners to introduce them to better finance solutions who better understand their needs.
Now is the ideal time to re-connect with customers about potential equipment purchases. For many customers, finance will be an important part of the conversation.