Act Fast or Miss Out this EOFY

With the end of the financial year approcaching and the significant reduction of the Instatnt Asset Write Off Scheme we are expecting processing delays of up to two weeks in the lead up to end of financial year (EOFY). Get ahead of the crowd by calling your broker today!

Historically, EOFY is the busiest time on the equipment finance calendar. With just 7 weeks to go until the June 30 EOFY deadline, there are a few things to think about if you are looking to buy new or upgrade your existing vehicles and equipment.

All lenders face increased deal volumes at EOFY typically resulting in significant processing delays. We recommend allowing extra time to get your finance sorted. As a guide, you should allow:

• 2 weeks for application approval.
• 5 days for settlement finalisation.

While every effort is made to turn your transaction around in a shorter timeframe than this, it is best to prepare for the worst-case scenario and get in early.

You can get a preapproval now which will speed up the process when you do choose to purchase an asset closer to EOFY.

The Ins & Outs of Temporary Full Expensing

An extension of the government’s Instant Asset Write Off Scheme, temporary full expensing allows eligible businesses to immediately deduct the business portion of the cost of eligible depreciating assets purchased before 30 June 2023. Furthermore, the business portion of the cost of improvements to both existing and eligible depreciating assets purchased within the same window of time can also be immediately deducted.

Put simply, rather than claiming tax deductions over the life of the asset under standard depreciation rules, you can immediately write off the full cost in the financial year it was first used or installed for use.

The aim of this initiative was to stimulate investment to support the economic recovery from COVID-19. With reduced tax payable comes increased cash flow for businesses and therefore more money to invest in assets.

Eligibility

Under this initiative, businesses with an aggregated turnover of less than $5 billion can immediately deduct the full cost of new assets. If assets are second hand, the business must have an aggregated turnover of less than $50 million to be able to deduct the cost of the asset.

Depreciating assets for which temporary full expensing can be applied are those which were or are purchased between now and 30 June 2023.

All eligibility criteria and information about temporary full expensing can be viewed on the ATO website.

Important Considerations

It is important to note that businesses can only deduct the business portion of the cost of the asset or its improvements. If your asset is used 50% for business purposes and 50% for personal purposes, only 50% of the cost can be deducted.

Cars are subject to the car tax limit which, for the 2022-23 financial year is $64,741. This means if you buy a car worth $80,000, you can only tax deduct the value of $64,741.

At Magnolia Lane, we tailor finance solutions specific to your unique business needs. It is our role as your equipment finance broker to source the best possible rate for you. Through our accreditation with a suite of lenders, there really is no limit to what we can assist with. Contact us or get a free quote today and let’s grow together.

Our advice is general in nature and should not replace that of a qualified accountant. It is best to speak to your accountant before making an investment. Investments should always serve a purpose and fit within your company’s budget.

The post End of Financial Year: Act Fast or Miss Out appeared first on Magnolia Lane Financial Services.

The Ins & Outs of Insurance Premium Funding

When it comes to protecting you and your assets, insurance is a no brainer and in most cases from a lender’s perspective, non-negotiable. Learn how Insurance Premium Funding (IPF) can benefit you and your business. 

Asset insurance is a risk management strategy. It reduces the financial impact or loss to your business if your assets are damaged, written off, or stolen. Depending on which cover you have in place, you can be protected against costs relating to repair or replacement of equipment as well as lost income from downtime as a result of the equipment loss or failure.

Protecting your assets with insurance typically comes at a high price. This can dent your cash flow. IPF is a flexible solution which protects your cash flow. IPF allows you to pay your premiums on a monthly basis even if your insurance company does not offer monthly repayments.

How it Works

In the lead up to your insurance premium due date, your insurance provider or broker will send you policy renewal invoice/s. Once you have provided these to your broker at Magnolia Lane, they will send you quotes for 6-12 month loan terms, depending on your needs. After you have accepted one of the quotes, we will provide a contract from the lender for you to sign.

At settlement, the IPF lender will pay the premium/s on your behalf. You will then commence paying monthly instalments back to them for the stipulated loan term.

The process from application to settlement is fast and efficient. Even better, we manage it on your behalf every step of the way.

Benefits of IPF

There are a number of benefits of IPF. The most obvious is the preservation of cash flow. Insurance premiums can be quite expensive, particularly if you have a number of policies to cover your fleet. With IPF, rather than paying a lump sum and eating into your cash flow, you can break your premiums down into much smaller, more manageable monthly repayments. This frees up cash that you can invest back into your business.

If you do have several policies, it may be confusing to keep track of which ones you have and have not paid. IPF allows you to manage and pay multiple policies in one monthly instalment saving you time and confusion. With fixed interest rates and terms, you can be confident knowing what your repayments are and when they will be due.

Both the premium and interest payable may be allowable business expense deductions come tax time, making IPF a tax effective option.

If you have existing equipment finance loans with Magnolia Lane and choose us for your IPF, you have the added benefit of housing all your finance under the one roof. This means that when you need a policy added or cancelled off your IPF loan, you need a payout on your equipment finance loan, or you have misplaced your loan documents, you just have to think of one name, Magnolia Lane. We are your dedicated point of contact. We exist to alleviate confusion and reduce the frustration of post-settlement contract administration.

Need to Cancel or Add a Policy? 

If you have let go of an asset for one reason or another and no longer require cover for it, your insurance company will process any applicable refund to the lender. The lender will then pass this onto you, pending any outstanding payments. If you have multiple policies on the same IPF contract, the lender will recalculate your repayments, taking out the policy which has been cancelled.

Likewise, if you acquire new assets throughout the loan term you could be eligible to add these to the loan. Bear in mind that repayments would be adjusted accordingly.

Applying for IPF

For an obligation free IPF quote, contact the broker team via broker@magnolialane.net.au or our office on (02) 8287 3000.

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