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Approximately three-quarters of small businesses are overlooking the government’s $150,000 asset write-off scheme, according to SME Finance Group.
The group’s founding director, Michael Pratt, has said that eligible SMEs are “concentrating” on other stimulus measures released by the government throughout the COVID-19 pandemic and appear to have “forgotten” the availability of the $150,000 instant asset write-off through the ATO, which is in place until 30 June.
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The business finance platform stated that the government put in place its $700-million package to increase the instant asset write-off, with the aim of encouraging businesses to buy big-ticket items such as cars and equipment. However, many have not taken up that offer, despite it being five times the usual amount.
According to Mr Pratt, this could be for a vast number of reasons.
“Maybe it’s because they’ve not had the time needed to really consider what they need to support and grow their business in terms of an injection five times what they were originally considering at the start of the financial year,” he said.
“Maybe they don’t know how to go about securing the monies, especially smaller private companies with a turnover of less than $50 million that have likely structured their business financing in a way that’s unique to them.
“They often haven’t been given the data they need by their accountant to tick all the necessary boxes to help ensure their applications are successful through many traditional sources,” Mr Pratt said.
Mr Pratt noted that with the “right planning”, a business can significantly reduce their tax liability in the 2020 financial year by using the government write-off scheme.
Further, the founding director encouraged these businesses to take advantage of other schemes and conditions that could bring them into the next financial year stronger, including the current low interest rate environment.
“Having the correct financing structures in place will help ensure a better cash flow for businesses to meet their overall operational objectives moving forward,” Mr Pratt said.
“There are some great deals out there to help enable operators restructure their finances to maximise opportunities, manage cash flow and reduce their risk exposure. It’s accessing them that can sometimes be a challenge.”
For this reason, he encouraged all small businesses to work with their advisers in order to achieve a positive result, prior to the 30 June end-date.
“[W]e urge them to work with their accountants and financiers now to maximise this opportunity appropriately before it’s too late,” Mr Pratt said.
“There could be millions of dollars available to them to invest constructively that they’ll potentially miss out on.”
Mr Pratt concluded by noting that work done now to maximise concessions will only benefit business owners into the future.
“We appreciate it’s a stressful time and nobody has a crystal ball. However, a significant proportion of business owners will start to see green shoots in the coming months,” he said.
“Of course, some sectors will be more impacted than others, but those who act informedly now will have the advantage of a brighter outlook moving forward.”
[Related: Brokers thanked for role in supporting SMEs]
