Practices are navigating through the third year of ups and downs brought on by the pandemic. But the pursuit of business continuity and growth means that owners still need to make important calls for their practices.
The good news is that there are some certainties that you can take advantage of. There are typically significant tax benefits that come with business use purchases. If you are considering purchasing assets for your practice such as new equipment, upgrading your practice fitout or even a new car for business purposes, presenting this information to your accountant as early as possible will give you an advantage when it comes to planning out your tax bill.
As a result of the pandemic’s impact on the economy, the government announced support and financial assistance in recovery planning. The instant asset write-off for businesses was initially increased five-fold – from $30,000 to $150,000. But as part of the government’s 2021/22 budget, it moved to a temporary full expensing rule where there is now no value threshold. This means any business earning up to $5 billion can write off the full cost of any depreciable asset purchased from 6 October 2020 and first used or installed by 30 June 2022.
Temporary full expensing has now been extended to 30 June 2023 – and then it stops. You should consider whether making capital purchases in this financial and next is more optimal i.e. spread the deduction over two tax periods rather than making a mad dash this time next year. Always check in with your accountant about your specific circumstances in relation to this incentive.
It’s a timely reminder for business owners to take advantage of the settings while it’s around. After all, making a significant business purchase can be much more beneficial beyond its primary purpose such as cash flow, savings for other expenses or upgrades, and increased patient satisfaction.
Another major consideration for tax time is the supply of stock. Ongoing delays from overseas manufacturers, plus a spike in sales and stock shortages, could mean that leaving purchases to the last minute could see deliveries and installation fall outside of EOFY, so avoid cutting it too close and missing out.
When it comes to financing the goods, it’s been widely assumed that you must pay cash in order to get the write-off. However, you can actually borrow funds to acquire the eligible assets. Facilities such as a chattel mortgage, or equipment loan, may meet the criteria. You can also buy from multiple sources or buy multiple eligible items under one invoice.
Here are a few general rules for the measure to confirm with your accountant:
- For assets you start to hold, and first use (or have installed ready for use) for a taxable purpose from 6 October 2020 to 30 June 2023, the instant asset write-off threshold does not apply. You can immediately deduct the business portion of the asset under temporary full expensing
- Goods can be new or second-hand
- Goods are first held from 6 October 2020, and first used or installed by 30 June 2023
- You can make numerous claims across many tax invoices or with multiple items on the one invoice
- It’s not a one-time-only offer, just so long as each purchase meets the criteria
- If financed, the goods must be under a specific loan type, as not all facilities are appropriate
- Assets that fall into this scheme include medical equipment and devices, dental chairs, IT equipment including servers, computer and phone hardware, along with scanners, copiers etc. Plus practice furniture, cabinetry, white goods and so on
- All work vehicles to the extent that they are used for business purposes
Lastly, with the Federal election recently taking place, there’s no guarantee that the new government will leave these rules in place. So it’s best to consider taking up the temporary full expensing scheme well ahead of 30 June 2023. Always speak with your accountant for specific advice about how it applies to your personal circumstances and needs.
Inline Imaging Technology partners with Credabl, to offer a quick, easy and pain-free way for you to get the finance you need. Check out our Buy now, pay later finance option here.
Credabl are a team of finance specialists providing tailored solutions for medical and dental professionals. Through simplified, customised and digitised solutions, we ensure medical professionals the financial attention they deserve in both their personal and professional lives. With niche finance knowledge and specialist industry skills, Credabl is your partner on call - www.credabl.com.au
Contact our team at Inline to discuss your equipment requirements and we'll work with Credabl on the best finance deal for you - 1300 033 723 or email@example.com.Disclaimer: This article is a guide only and does not constitute any recommendation on behalf of Inline Imaging Technology, Credabl Pty Ltd (ACN 615 968 100) or any of its related bodies corporate (Credabl). The information in this article is general in nature and we have not considered your personal objectives or financial circumstances or needs when preparing it. Before acting on this information you should consider if it is suitable for your personal circumstances. Credabl is not offering financial, tax or legal advice. You should obtain independent financial, tax and legal advice as appropriate.