Assistant Minister for Road Safety and Freight Transport, Scott Buchholz, said the 2020 Federal Budget will help transport businesses across the nation to invest, hire, innovate and grow.
“We have seen how rapidly the transport and logistics sector responded to the enormous freight task induced by the pandemic,” said Buchholz.
“This should make every Australian realise just how essential our freight operators and truck drivers are to the economy.
“This budget is all about supporting industries, like the transport industry, in a bid to encourage a strong economic recovery and get more Australians back to work.”
Buchholz said the Liberal National Government is supporting a transport industry that is ready to invest, innovate and employ, aided by the expansion of the Instant Asset Write-Off (IAWO) and the introduction of Temporary Full Expensing (TFE).
“Under our JobMaker plan, an estimated 3.5 million businesses across Australia will be able to deduct the full cost of an eligible asset in the year it is first used or installed, ready for application through TFE,” said Buchholz – adding that the TFE measure became available on 6 October 2020, and will remain active until the end of June 2022, with no limit on the value of the assets.
“Our transport businesses require high capital investment to get started and significant ongoing investment to stay profitable,” he said.
“These measures will provide a massive cash flow boost for transport operators by significantly reducing their tax liability when purchasing a new high-value piece of capital equipment such as a truck or trailer.”
Buchholz said the IAWO program has also been extended for an additional three months to the end of March 2021 in order to assist those businesses investing less than $150,000 in new and second-hand equipment.
Buchholz outlined a Case Study in which Trans Western Pty Ltd has a fleet of trucks and trailers for specialised transportation with aggregate annual turnover of $20 million for the 2021-2022 financial year.
On 1 July 2021 Trans Western purchases a new prime mover for $600,000, exclusive of GST.
Buchholz said without the TFE measure, Trans Western would claim a total tax deduction of around $180,000 for 2021-2022, with the remainder of the cost being depreciated over future years.
However, under the new TFE measure, he explained, the company would instead claim a deduction of $600,000 for the full cost of the new equipment in 2021-2022, approximately $420,000 more than before.
“At the 2021-2022 tax rate for small to medium companies of 25 per cent, Trans Western Pty Ltd will pay around $105,000 less tax. This will improve the company’s cash flow and help it reinvest and grow its operation,” he said.
Read more about the Budget here.