In the 2019-2020 Budget Announcement, the Federal Government proposed to increase the instant asset write-off threshold from $20,000 to $30,000 for eligible assets and also sought to expand the application of the instant asset write-off to apply to both small and medium-sized businesses with an aggregated annual turnover of less than $50 million.
“With the small business tax breaks [announced in the federal budget], there has never been a better time to buy solar” John Grimes –Australian Solar Council
“Using tax benefits outlined in the 2019 budget an SME will actually get PAID to install solar in the first year – and then the electricity savings come in on top!” Greg Ferrett – ASM Money
Tax Incentive
The tax incentive announced in the 2019 Federal Government Budget extends the small business tax break to $30,000. The best investment a small business can make is a renewable energy project. Here are the numbers.
How would it be if you could receive the savings with no deposit and approval with no financials for most ABN holders?
| 30kW Solar system installed for $30,000* | |||
| Year 1* | Year 2* | Year 3+* | |
| Potential electricity savings | $14,454 | $14,454 | $14,454 |
| GST Savings | $2,727 | $ – | $ – |
| Company Tax savings
(based on federal budget) |
$7,925 | $ 346 | $ 216 |
| Total Savings | $25,106 | $14,800 | $14,670 |
| Payments (est.) | $9,084 | $9,084 | $9,084 |
| Cash benefit to the business | $16,022 | $5,716 | $5,586 |
*purchase price is based on $1.00 a watt and savings assume unit KWH cost is $0.30 and average annual production of a 30kw system over 12 months in zone 3. Actual production may vary. Repayments based on four-year chattel mortgage and subject to credit approval. All figures rounded to the nearest dollar.
Proposal Passed as Law
This proposal has now been passed as law and applies to all eligible assets first used, or installed ready for use, from 3 April 2019 to 30 June 2020. For Australian small and medium-sized business owners, the instant asset write-off scheme is a great way to upgrade technology and help support long-term growth, while reducing your taxable income.
Assuming the business;
- Is GST registered and trading for two or more years,
- Has a clear credit file and,
- Includes one asset-backed director or business partner as guarantor (and no asset backing if in business for more than 5 years subject to credit approval)
these savings can be generated with a no-deposit finance solution and just a driving licence.
Window of Opportunity
While the tax benefit has been extended, between now and 30 June 2019 there is a major opportunity to close business.
However, recent research by American Express shows that almost half of all Australian small businesses are unaware of the scheme1 and this is the first time the instant asset write-off has been available for medium-sized businesses with an annual turnover of between $10 million and $50 million. This presents an opportunity for you to start a conversation with your small and medium business clients to help them unlock the impacts of the instant asset write-off.
If a business wants to install solar with no deposit and are prepared to install and settle by 30 June 2019, they could get the full impact of tax savings to their bottom line straight away and the bonus of ongoing electricity savings.
No cash down – savings on electricity – tax savings – GST benefit.
Call to get in touch with your local ASM Money representative to talk about the potential today.
1Private Media Pty Ltd. Publishers of SmartCompany (https://www.smartcompany.com.
