Instant Asset Write Off

Instant Asset Write Off Solution – Key Features

Instant Asset Write Off for each eligible asset that costs less than $150,000

Tax incentives as part of the Australian Government’s economic stimulus for businesses purchasing assets are significant and are unlikely to be repeated. Eligible businesses can instantly write off the cost of each eligible asset purchased up to the $150,000 threshold.  Many businesses now seeking finance for new asset purchases are being readily declined on the basis of their other payment deferrals.

This is an opportunity too good to be missed, so AddCash has developed a finance solution to assist businesses to take advantage of this tax time incentive. Read about the Instant Asset Write off solution and example below. For more information download the product brochure or application form below or contact AddCash if you have any questions.

Available for New and Second-hand Assets

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Finance 100% of the Asset purchase cost including Government & other associated costs

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Retain the benefit of any applicable GST refund/credit on Assets purchased

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Spread repayments up to 5 years with final balloon option

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No instant exclusions for Deferred Finance Payments

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Benefit of the Instant Asset Write Off will offset associated finance costs in the first year

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Interested in this solution?

Summary of Features & Conditions

Asset Finance

  • AddCash will pay vendor directly.
  • No instant exclusions for Deferred Payment arrangements on other existing finances.
  • Purchase of income generating assets that satisfy the ATO criteria for tax incentives.
  • Finance 100% of the Asset purchase cost including GST, other Government and associated costs, plus upfront finance costs.
  • Asset Valuations – vendor invoice and/or independent valuation.
  • AddCash listed as the interested party on asset insurances.
  • Spread repayments over 5 years with option for a final balloon.
  • Must maintain minimum Customer Invoice Finance requirements.

Pricing

  • Establishment fee 4% of Limit – includes documentation, searches and security registrations
  • Weekly charge 0.375% on outstanding finance balance.
  • Minimum term 1 year – break fee $1,500 thereafter prior to 5 years
  • Monthly Account Charge $50
  • Asset valuations at cost

Customer Invoice Finance

  • Confidential – business continues to deal exclusively with Customers.
  • Limit set to value of purchased Assets and associated upfront costs.
  • Self–Managed Business Customers:
    • Maximum LVR^ 30% (e.g. for $150k asset finance the business must
      hold a minimum of $500k of approved Self-Managed Customer debts).
    • Minimum of 5 approved Self-Managed Customers with debts owing at any one time.
    • Customers continue to pay into the Borrower’s existing business bank account.
  • Nominated Finance Customers:
    • Maximum LVR^ 80% (e.g. for $150k asset finance the business must
      hold a minimum of $187.5k of approved Nominated Customer debts).
    • Customer payments to Borrower’s bank account newly setup by AddCash and access to full proceeds of Customer payments while 80% LVR criteria being satisfied.
  • Online read only access to Borrower’s accounting software and bank accounts. AddCash will source directly regular updates of Customer invoicing, debtor and creditor ledgers, bank statements and other relevant accounting information.

Glenn owns and runs a transport company. He has been offered regular work and requires an additional trailer. He plans to purchase a 45ft Tri Axle Flat Top worth $70,000 before Government and other associated charges. The Dealer will deliver the trailer for Glenn ready to use this year.

After speaking with his Accountant, Glenn has confirmed his business is eligible for an 
Instant Asset Write-off on the trailer purchase because:

  • Annual turnover for the business is less than $500 million
  • Cost of the trailer is below the $150,000 threshold (previously $30,000)
  • Sufficient profit has been made to take advantage of the instant asset write off
and reduce the income tax payable for the 2020 financial year.

Rather than take cash out of the business Glenn has decided to use AddCash to finance the trailer purchase. AddCash will finance 100% of the purchase value and associated costs reducing the requirement for an upfront cash contribution. He intends to spread repayments over five years with a final balloon to lower the regular ongoing repayments and minimise the impact to his ongoing cashflow. Glenn can also retain the benefit of any GST refund or credit when he lodges his Business Activity Statement for the June quarter.

The benefit of the Instant Asset write off will offset the associated finance costs in the first year. Glenn’s business is registered for GST and the lower company tax rate of 27.5% applies.

2020 Tax Write Off $
Trailer Purchase $70,000 @ 27.5% 19,250
Finance Costs first 12 months  
Establishment Fee 3,080
Ongoing Charges 15,237
Monthly Account Charge 600
Total 18,917

Customer Invoice Finance component

Annual turnover for Glenn’s business is $2.8 million.  There are 20 regular active Customers who on average pay 42 days from invoice date.  Amounts owing from Customers range from a few thousand dollars up to $37,000 and the total owing from all Customers is $322,000.  The business satisfies the AddCash requirements of a minimum of 5 Customers and maximum LVR of 30% (ratio of Asset Finance to Total owing from Customers | $80,080 divided by $322,000 = 25%).

Glenn has Nominated 4 Customers for Customer Invoice Finance who consistently have a total balance owing that does not fall below $104,000.  He continues to deal with them as normal but instructs them to pay directly into his Business’s bank account held with AddCash.  This satisfies the minimum Nominated Customer LVR of 80% (ratio of Asset Finance to Total owing from Nominated Customers | $80,080 divided by $104,000 = 77%).

Glenn has the trailer he needs to do the job, taking full advantage of the Instant Asset Write Off stimulus while responsibly managing his Business cashflow.

^ The abbreviation LVR generally stands for “Loan to Value Ratio” and is used above for ease of understanding this finance product. AddCash facility documentation refers to the ratio “Advanced Payment Percentage”.

Learn about our Accelerated Depreciation Deduction Solution

FAQ

The Instant Asset Write Off can be used for both new and second-hand assets. AddCash will provide funding for assets more than 5 years old subject to valuation and ownership verification.
Yes the Instant Asset Write Off for eligible businesses is available for each eligible asset that costs less than the $150,000 threshold. AddCash will finance multiple asset purchases provided you satisfy all other criteria.
Government and other associated costs and charges required to install or make the asset ready for use will be funded by AddCash. These include GST, Dealer Deliver, Stamp Duty, Registration, Insurance and any other options, improvements or accessories either factory or dealer fitted.
AddCash will provide sufficient finance to cover any GST included in the asset purchase. On your next BAS you can claim the GST and retain the benefit of any offset or credit. The GST component is included as part of the ongoing finance package repaid over the term up to 5 years.
The higher $150,000 threshold for the Instant Asset Write Off is only available until 30 June 2020 so you need to be quick. To be eligible assets must be used or ready to use prior to 30 June 2020.
The ATO rules and associated legislation are complicated and change regularly. AddCash does not know all the circumstances unique to every business. You should seek independent expert advice from your Accountant who can confirm the eligibility of your business and the assets you acquire for the Instant Asset Write Off or Accelerated Rate of Depreciation. AddCash provides no guarantees that you meet the ATO eligibility criteria.
This allows AddCash to offer features not otherwise available for Asset Finance. These include financing the asset purchase plus associated government charges and costs, allowing you to retain any GST credit, and providing finance even if you have deferred payments elsewhere.
You can pay out AddCash at any time. If this is within the first 12 months you will be required to pay the balance of finance charges that would have been otherwise payable if you had retained the facility for 12 months. This is the minimum length of time for AddCash to make the product offering economically sustainable.

Interested in this solution?