The Federal Budget: How it could help fleet managers

Last week, the federal government released this year's budget, to mostly positive reviews. Small enterprises fared particularly well, as the government announced a number of incentives to help those on the smaller side of business grow.

Part of the budget included $5.5 billion in small business support and tax relief, while also allowing SMEs to concentrate on innovating with a removal of fringe benefits tax on electronic devices.

However, perhaps the most attractive announcement as part of the budget was the increase in the $1,000 threshold for immediate tax deductions on business equipment purchases.

New tax help

Under the new policy, small companies - those with an annual turnover below $2 million - can immediately claim their tax back on business equipment purchases of up to $20,000. This is a vast improvement on the previous amount, and the speed at which companies can claim back their money - it previously took several months or years of spread-out claims.

It will also be a fresh new option for fleet managers looking to buy new car in the coming months. While the $1,000 limit was little help in this regard before, there are significant new opportunities for making purchases and immediately claiming the tax back, helping businesses with the significant capital investment that is purchasing new company vehicles.

What equipment is included?

"If you run a cafe, it might be new kitchen equipment, or new tables and chairs," Treasurer Joe Hockey explained in his May 12 budget night speech, as reported by the ABC.

"If you're a tradie, it might be new tools or a computer for the home office. Cars and vans, kitchens or machinery ... anything under $20,000 is immediately 100 per cent tax deductible."

So, if you're a fleet manager looking for an immediate saving - to help maintain cash flow around your new vehicle purchases - you will likely have new options from the new budget.

Some things to remember

  1. Software that is developed in-house by the claiming company is not tax deductible; however, third-party options are. Not only does this make fleet management software a great tool for cutting operating costs in the long term, it could continue to provide immediate savings thanks to the newer, faster tax deductions.
  2. Although the new threshold stands at $20,000 for each item, there is no limit to the amount of individual purchases that can be made with this deduction.
  3. Companies wishing to make the most of this tax break have until June 2017 to make their purchases, leaving fleet managers with plenty of time to find the cars that best suit their needs.

If you need assistance sourcing your next fleet vehicle or finding the software that can make a difference, contact Smartfleet on 1300 218 841.