While the majority of people focus around 30 June each as tax time, smart operators know that tax is a year-round consideration and it starts even before 1 July. More a marathon than a sprint you could say. But an easily achievable marathon if you put the work inconsistently. Let’s face it, by the time 30 June has come around, the majority of business expenses have been made and accounted for the year. Yes, there may be some final purchases that can be made to reduce taxable income and some accounting moves made by your accountant, but essentially, the figures are in place.
To ensure tax opportunities are optimised, attention should be paid especially to major acquisitions such as trucks throughout the entire year. The way a truck is financed in the loan type selected can be extremely significant in regard to tax benefits to the business. If you’ve never thought of ‘tax time’ as a 12 month period, then the start of this new financial year could be the time for a change of mindset.
EOFY Truck Finance Opportunities
There are some opportunities that seem to come around at EOFY and that is by way of sales. Many manufacturers and suppliers use this annual sales-fest to offer discounts on trucks and other equipment or special deals to attract buyers and move stock. With many states in lockdown over the last week of the financial year limiting some buyers from getting out to make purchases, some sale events may continue well into July or while stocks last.
Getting in now could score you a reduced price on a new truck. A price reduction which you can allow you funds to spend on other necessities.
Made a loss? No worries!
Under the measures announced in the Federal Budget, businesses that made a loss in the 20/21 financial year could be in line for an actual cash refund. Loss Carry Back Tax Offset allows eligible businesses to carry losses made in some financial years (19/20, 20/21, 21/22) back and claim against profits made in earlier years. If tax was paid in the profit-generating years, that tax is refunded.
So if you’re business has suffered due to COVID-19 or other economic downturns, there could be some light at the end of the tunnel and a cash boost to spearhead your plans for the year ahead. But this measure can also be worked effectively when considering a new truck purchase.
We’ve covered how loss carryback can work in a business’ favour in regard to the purchase of a new truck in a number of articles, but we’ll recap if you missed it. If you purchased a truck during 20/21 with Chattel Mortgage finance under the Instant Asset Write-Off or temporary full expensing measures, the full value/price of the truck could be written off in that financial year. All subjects of course to eligibility criteria.
Such a massive expense posted to your business accounts could result in your business posting a loss for the year. That loss can then be claimed against tax paid on an earlier year. These measures, temporary full expensing and loss carryback, are both in place for this current financial year for eligible asset purchases and eligible businesses. So if you’re planning to purchase a new truck this year, paying serious consideration to the tax benefits around the financing can pay off.
Do you know what accounting method your business implements? Many business owners leave all that to their accountant and just go with the flow, often over many years. But with the current temporary full expensing measures in place, it may be time to look into this aspect of your business.
There are two types of accounting methods – Cash Accounting and Accruals Accounting. The key difference is in the timing of when income and expenses are posted to the accounts. But they also affect the suitability of loan types and that can flow through to realising some tax benefits through truck loans.
Chattel Mortgage is considered the most suitable loan type to implement temporary full expensing. But it is suited to the cash accounting method. If a business implements the accruals method of accounting it may not have the opportunity to realise these benefits.
The accounting method used by a business can be changed but must operate through the entire financial year. So if you’re business uses the accruals method and you’d like to change to the cash method to take advantage of the Chattel Mortgage temporary full expensing combo with your upcoming truck acquisition – the start of the financial year is the time to discuss the possibility of a change with your accountant.
Maximising Truck Loan Opportunities
Time to talk about maximising the opportunities that are on offer and what vehicles you need to make the most of the situation. The various state and territory budgets have recently been announced and most include significant infrastructure, construction and building projects and prospects. For many owners and operators of crane trucks, excavator trucks, dump trucks, materials handling trucks and other models, these can mean lucrative work contracts on offer. But you may need new vehicles to make it happen.
Purchasing new trucks with the cheapest and most appropriate truck loans can set your business up, not only to successfully bid and complete the work on offer but to realise the tax benefits as cost savings.
Jade Truck Loans offers the full range of truck finance options to suit all types of business operators including those requiring low docs and no docs loans and those with credit issues.
Our truck loans include:-
All have tax-deductible elements which you are invited to review on our product web pages.
We also include fixed interest rates in all our truck finance deals. Fixed at the cheapest rate achievable. The RBA held interest rates steady at the current historic low levels at their July 2021 meeting. But how long will these low interest rates last? Some economists see the RBA’s move to cut back on its bond buying program as a prelude to an earlier cut to the cash rate.
Truck buyers can shield their business from any increase in lending interest rates in the next few years by locking in a truck loan at our fixed rate. By taking a loan say over 7 years at our cheap interest rates now, your business is assured of enjoying that low interest rate loan over the full 7 years of the loan, regardless of what happens with the official cash rate and lending rates.
There are definitely a lot of actions that business owners can take to ensure they receive their entitlements in regard to tax benefits. But these actions should be considered over the entire financial year not just in the scramble to 30 June. To discuss how we can assist your business realise tax benefits through cheap truck loans, have a confidential conversation with one of our consultants.
Call 1300 000 003 for a quote to set your business on a good road through 2021/22 and beyond.
DISCLAIMER: THIS INFORMATION IS ISSUED PURELY FOR THE PURPOSE OF GENERAL INFORMATION PROVISION. IT IS NOT TO BE TAKEN AS THE ONLY SOURCE OF INFORMATION FOR BASING FINANCIAL DECISION-MAKING. THOSE REQUIRING FINANCIAL GUIDANCE AND ADVICE SHOULD CONSULT WITH THEIR FINANCIAL CONSULTANT OR ADVISOR. NO LIABILITY IS ACCEPTED FOR ANY MISREPRESENTATION OF POLICIES, DATA OR ERRORS IN THIS CONTENT.