Increased asset write-off scheme benefits the sector

EcoLease, a finance company that specialises in organising lending for SMEs in the print and signage sector, has had a busy start to 2020.

When the coronavirus pandemic hit, the team at EcoLease were inundated with calls from customers looking to urgently defer loan repayments on equipment in order to keep their heads above water and their staff employed.

The demand for these negotiations was unrelenting from when the shutdowns were announced until about three weeks ago, when the situation started to change and business owners regained some confidence and even started to look at making investment decisions again.

EcoLease director Marian Taggart-Holland said having the relaxation of restrictions has helped change the tide, but this has also been assisted by the increase of the Instant Asset Write Off Scheme for businesses earning up to $500m a year from $30,000 to $150,000.

Initially the increased asset write-off limit was set to expire on 1 July 2020 but in recent announcements by Treasurer Josh Frydenberg that has now been extended to the end of this year.

“I think what has happened in the last few weeks is things have settled down and people are talking to their accountants and actually looking at their year and doing a bit of tax planning and they are saying ‘we’re actually still going to get a tax bill’ so the accountants are advising them to buy that equipment or vehicle they may have been looking at because ultimately the tax saving is quite compelling,” Taggart-Holland told Sprinter.

“There are definitely businesses that are really hurting and those deferred payments are helping, but other businesses did it as a precautionary measure.

“We are surprised at the number of businesses that are buying equipment and we are actually going to have a very busy month but if you talked to me six or eight weeks ago, I would not have been sounding this positive.”

EcoLease is operating a virtual stand in the Visual Connections’ Virtual Trade Show and is encouraging business owners to consider taking advantage of the Instant Asset Write Off Scheme to reduce tax debt before June 30 but also add equipment that could help lift efficiency, productivity and profit.

Taggart-Holland says a business could potentially reduce its tax from as an example $30,000 to $10,000 and at the same time add some equipment that will generate income in another area.

“You may have pivoted into a new area or it might just mean you can produce something more efficiently so it will bring down your costs. There is a pretty compelling case for businesses to make that decision now, rather than wait for three weeks time,” she said.

The EcoLease stand in the Virtual Trade Show features a video explaining the tax benefits of the asset write off scheme.

“The Instant Asset Write Off is absolutely stimulating activity for equipment,” she said,

EcoLease has operated in the sign, display, graphics and print sectors for 13 years and is deeply aware of the industry and the parts of it that are thriving and would be considered a safe bet by lenders and this can help when it comes to loan approvals.

“In finance at the moment, there is a lot of policy upheaval with lending and we are seeing that first hand because we deal with all the major banks and finance companies, we are seeing daily lenders changing lending policies so it is very important for businesses to have a good relationship with your banker, but it is important that they are dealing with businesses that know the industry.

“We’ve been in this industry – sign, display, graphics and print – for 13 years so we know the industry and we know the businesses. We know the impact the equipment has on the top and the bottom line of a business so being able to understand that particularly in these times is important to help improve the chances of approval.”

To view EcoLease’s Virtual Stand, please click here.

To contact EcoLease, click here.

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