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Big Budget Bonus For Small Business
Amongst the handouts announced in the Swan budget on 12th May was an increased bonus tax deduction of 50 percent for eligible assets purchased before 31st December 2009 for small business.
That’s great news for a small business contemplating buying a new company vehicle.
The example given in the tax documents refers to a vehicle costing $30,000. The current tax deduction under the 30% tax break is $9000. But the additional amount announced in the budget is a further $6000 resulting in a total deduction to small business of $15,000.
Good news… and bad news.
OK let’s get the bad news out of the way.
Yet again it’s the official car sales figures – this time for February. New vehicle sales were down a whopping 22% in February. This equates to just under 20,000 less vehicles sold compared with the month of February 2008.
However this is positively mild news when compared with the US. The equivalent statistic stateside for the same month was that sales were down an incredible 41% (General Motors down 53% alone!). It’s actually the lowest monthly sales figures seen in the US for 28 years.
So whilst the local news has to be considered ‘bad news’ – it could have been a lot worse.
So, the Good News?
Well it’s good news for those who are looking to purchase a car for business use. After some uncertainty, it has now been confirmed that motor vehicles will fall into the right asset category to claim a 30% tax break on the purchase this financial year. There are a ton of details as you’d expect but in layman’s terms if you are running a business and have had any plans to purchase a car in the next 18 months or so, you should consider ordering now, or at least before June 30.
Mazda 3 the top selling car in January
The small car segment continues to make inroads into traditional large car territory as the Japanese built Mazda 3 knocks the Holden Commodore off the top spot for sales in the moth of January.
This not only reflects a general shift towards smaller and more fuel efficient cars but also demonstrates how when fleet buyers are taken out of the market (many businesses close for a time over the Xmas period), overall sales figures can move around quite significantly.
Whilst this was good news for Mazda (in fact this is the first time that a wholly imported brand (Mazda) has taken the top spot from manufacturers that still build in Australia) the overall market suffered a 18% drop in sales compared to January 2008.
So it’s tough times ahead for the Australia auto industry – especially the local manufacturers. January was also significant as it was the first time Mazda sold more units than Ford.
Let’s hope buyers can see through the doom & gloom, recognise some of the fantastic value available in Australia & give themselves a treat – especially if it’s made locally!
Car Dealers Saved – financing to be made available.
This afternoon, the government has just announced a rescue package for dealers who have ‘floor plan finance’ (ie they run off credit securitised by their vehicle stock) with GE and GMAC.
As everybody in the industry knows, when GE Money & GMAC announced a few weeks ago that they would be calling in all their debts, there has been a frantic struggle by dealers attempting to refinance before the debts were called in – expected to be Jan 2009.
Of course the credit crunch has dried up many sources that would otherwise have been available leaving hundreds of dealers faced with the very real possibility that they would be unable to repay these massive loans. That would eventually lead to car repossessions and scores of potential bankruptcies.
However thankfully, at the eleventh hour the government has stepped in and together with the ‘big 4’ Australian banks have approved a finance package of around $2 billion which will be made available to affected dealers. There will be eligibility criteria of course (such as the viability of the business) but this is fantastic news for the thousands of families who’s livelihoods are dependent on the retail motor industry.
More information to follow soon…
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