With the end of the financial year around the corner and extensions to the Federal Government’s Temporary Full Expensing (TFE) incentive, it’s a great time to update your business equipment. But before you rush out to purchase new or used equipment, there’s a few factors to take into consideration. Here are some tips from BOQ’s Equipment Finance team to help you make the most of the end of financial year opportunities.
Keep your equipment up to date
If your small business relies on any kind of equipment to achieve your business goals, it’s important that those assets are not only fully operational, but also cost-effective. Whilst simply updating in business equipment for the sake of it makes no sense sound investments can help your business run more smoothly and efficiently and may even provide a competitive advantage. Investing in business equipment – for example a vehicle, office equipment or computers is costly, but the more up-to-date your equipment and machinery, the more likely they are to help increase your revenue and lower your maintenance costs.
“As a guide, work out how much extra revenue or cost savings your new equipment will deliver and compare those gains against the finance, leasing, insurance and usage costs. You need to see a positive outcome to make purchasing new business equipment worthwhile,” says Ken Hayes, Head of Asset Finance at BOQ Finance.
As the challenges of COVID-19 demonstrated it also pays to be prepared for supply chain issues. Assuming the economy continues to bounce back, there may be a significant demand for new equipment which could result in equipment shortages. So now is the time to look ahead and assess your future equipment needs.
Take advantage of EOFY sales and small business asset write off incentives
As the financial year draws to a close, you can take advantage of end of financial year (EOFY) sales, when equipment manufacturers discount their stock in order to meet annual sales targets.
If you have already purchased new or used assets for your business or decide to purchase soon, you may qualify for the Temporary Full Expensing (TFE) incentive. Available until 30 June 2023, the TFE incentive expands on the previous Instant Asset Write Off (IAWO) scheme, which could have a significant positive impact on the cash flow of your business.
“The Instant Asset Write Off incentive allowed businesses to claim immediate tax deductions of up to $150,000 for the purchase of new, or second-hand equipment, such as agribusiness machinery and equipment, vehicles, shop fit-outs and office equipment. The TFE incentive applies to mainly the same type of assets, but removes the $150K cap and provides a longer timeframe to buy and install assets. If your business is eligible, it means that you can reduce the amount of tax you have to pay sooner by claiming a tax deduction for the full cost of an asset in the year of purchase and installation, instead of claiming depreciation amounts over several years,” said Ken.
Equipment finance could help preserve your working capital
Managing your small business finances can be a balancing act and given the challenges of the past year for many SME businesses, you probably have extra demands on your working capital. In order to keep your doors open and continue paying your employees and creditors, you may need to look into business lending options to help you purchase new equipment without using your working capital.
Equipment finance could be a solution with a wide range of options available including:
- Finance lease (including business car leasing options)
- Commercial hire purchase
- Specific security agreement (Chattel mortgage)
- Rental agreement
Find out how your business could benefit from the EOFY sales and asset write off incentives by speaking to one of our Equipment Finance specialist and consulting your Accountant.
Contact us today on email@example.com to find out more.