The end of the financial year, 30 June, signals the annual scramble for both consumers and businesses to make the most of both sale events and get their tax affairs in order. While for consumers it is customary to be able to secure goods from their wish lists at reduced prices, for businesses there are wider and more significant issues to consider.
Decisions made by businesses at this time can set them up well for the year ahead and allow them to take advantage of tax measures on offer. After a highly disruptive EOFY 2020 and the economy now recovering from the impacts of the coronavirus ahead of expectation, EOFY 2021 maybe even more significant than in previous years.
Sourcing low interest rate business finance can be pivotal to realising EOFY business objectives and we cover off a number of key issues for businesses to consider around commercial loans and business asset finance at this crucial time of year.
Business Tax Considerations
Purchasing prior to 30 June and bringing forward payments are customary strategies for businesses to increase their expenses and therefore reduce taxable income and tax payable. But a number of measures were announced in the past two Federal Budgets which provide businesses with the potential to supercharge tax benefits.
Specifically IAWO and temporary full expensing. Both these accelerated asset depreciation measures allow eligible businesses to claim the full purchase price of eligible depreciable assets in the year of purchase. To make that claim this financial year, the assets need to be in operation in the business by 30 June. The measures are in place through to 30 June 2023 but purchases made after 1 July can still realise the benefits but it would be next financial year.
Eligible assets may include motor vehicles, trucks, yellow goods, wheeled goods and a vast range of equipment used across many industries. In order to realise the tax benefit, the asset must be acquired using the appropriate form of business loan. That is commercial finance that includes the ability to depreciate the asset. The most appropriate form of loan for this purpose is Chattel Mortgage.
This form of finance is available for the purchase of most assets and attracts the lowest rate of interest of the range of commercial loans. Refer to our business loan interest rate tool to convert the price of your asset purchases into possible repayments.
Capitalising on EOFY Sales Events
Many dealers, sellers and manufacturers of a wide range of goods use EOFY for a sale event. Sale events are extremely popular in the motor vehicle market with good price reductions usually found in both passenger cars and commercial vehicles. Despite the pressures on manufacturing facilities caused by coronavirus in 2020, especially in Europe, car makers still managed to launch many new models. But the current global chip crisis which is delaying production for many car makers may delay future launches. This may impact the level or scope of EOFY, end of model runouts and other sale events.
The global chip crisis is also affecting some equipment manufacturers with new models. But business equipment covers a vast range of plant, machinery and general business equipment and sales are already being promoted in some areas.
Truck manufacturers are already advertising EOFY sales so get in quick as sometimes stock is limited on sale items.
Pre-Purchase Business Loan Considerations
Before jumping in for a sale item, buyers should consider closely – what is the deal? While most sellers of new motor vehicles, trucks and equipment would be considered reputable, there can be those that use the tricks of the sale. These can include pre-inflating the price so a discount looks more impressive.
The ‘deal’ may be a fully-optioned vehicle for example at a standard price. If you don’t really need all those extras you may strike a good deal on the standard model.
If the deal is around finance – check in with us before you commit. Some finance ‘deals’ can feature a ‘too good to be true’ interest rate. Closer inspection often reveals this promotional interest rate is only for a relatively short term after which a much higher rate, as in higher than most of our lenders, applies.
When presented with a finance deal from a seller, use our business loan repayment calculator to generate repayment estimates to compare with the offer made. We can assist you very quickly with a business finance deal so timing should not be a problem.
Finance for Sale Purchases
The same range of commercial loan products is available for purchases made at sale events as for full-priced, standard priced goods.
For business assets such as equipment, motor vehicles and trucks, the range of business loans includes:
- Chattel Mortgage for Businesses
- Rent to Own
- Commercial Hire Purchase
Low doc commercial loans, no doc and bad credit finance are available on assets acquired at sale events.
Getting your finance pre-approved prior to heading to a sale event can be a plus. Especially if sale stock is limited or you’re running out of time to meet that crucial 30 June deadline.
Ongoing Supportive Finance
When entering a new financial year it is time to consider the overall financial requirements to support the business moving forward. Commercial loans are available to support businesses with both general and specific non-asset buying purposes.
With the uncertainty of lockdowns still very real in Australia, many businesses may be looking to shore up their financial situation to be prepared for any of these or other unforeseen events.
Commercial loans for business include:
- Overdrafts arranged by both banks and non-bank lenders to cover cash flow issues.
- Business Lending both secured and unsecured to cover a range of purposes and non-asset expenditure.
- Insurance Premium Funding to spread the cost of large premiums over multiple payments.
- Invoice Financing to ensure you receive payment on customer invoices in a timely manner.
For business finance assistance to affect and support your EOFY and beyond business plans, speak to us about the range of lenders and loans we can connect you with.
Contact 1300 000 033 to discuss how we can assist your business with low rate loans.
DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.