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Saturday / July 20.
HomeminewsEOFY Incentives Coming to End

EOFY Incentives Coming to End

The last of the generous financial incentives, introduced during the pandemic to help stimulate the Australian economy, are about to come to an end.

From 30 June 2023, businesses will no longer have access to temporary full expensing of depreciating assets.*

The temporary full expensing legislation allows businesses to deduct the full cost of eligible depreciable assets, of any value in the year they were first held and first used or installed ready for use, for a taxable purpose. Introduced in October 2020 the provision will no longer apply from 30 June 2023. Any assets purchased thereafter will be depreciated over subsequent years.

Paul McKinley, Managing Director of Optometry Finance Australia, said this makes now a good time to invest in equipment, technology, practice furniture, and even motor vehicles for business use (although a car depreciation limit of AU$64,741 applies).

“Whether you buy new or second hand, as long as they are eligible assets and you have them installed and ready for use by 30 June 2023, you can gain the benefit of temporary full expensing. And it doesn’t matter whether you pay with cash or take a loan – the benefits are still there,” he said.

As Mr McKinley pointed out with the following example, the benefits are substantial.  “If a practice is on track to achieve a taxable income of $250,000, the tax liability will be $62,500.

“If, on 10 June, the practice invests $110,000 (including GST) on a device that is installed and ready for use by 30 June, it can take advantage of the temporary full expensing legislation.

“The practice’s taxable income will be reduced from $250,000 to $150,000.

“The corresponding tax liability will be reduced from $62,300 to $37,500, resulting in a saving of $25,000.”

Keep Delivery Times in Mind

Tim McCann, CEO of Rodenstock Australia, said not enough optometrists make use of the incentives in place to buy before the end of the financial year, and those who do often leave it too late.

“Unfortunately, not enough practice owners are aware of the financial advantages to be had in the lead up to the end of financial year.

“And this year, with labour and stock shortages across all industries and right around the world, I think those who leave it too late will be disappointed.

“Delivery times are typically six weeks from order to installation. At EOFY we know there are higher numbers of orders than normal and, therefore, timeframes can sometimes be shorter.”

“We’ve made sure that we have extra stock of our technology – like the DNEye-scanner and Impressionist, ready to go. However, practices really need to be making decisions and placing orders now to ensure they take delivery and have time up their sleeve to allow for installation ahead of 30 June.”

Mr McKinley cautioned all practice owners to ask their accountant for specific advice before making any purchases.

“While the incentive is there, you should never let tax be a driving force in your decision making. Make sure that whatever you buy will be of benefit to your practice, that the investment won’t leave you short of cash, and that you will get a return on investment.”

*Current at time of writing and subject to change by the Federal Government.