How is the 2016 Federal Budget affecting fleet management?

There are a distinct number of advantages for certain small businesses to have the ability to operate a fleet of vehicles. Those benefits, however, have often been hard to unlock due to the cost - a factor that few businesses can afford to ignore.

Fortunately, the 2016 Federal Budget contains provisions that make building a fleet of company vehicles easier for Australia's SMEs. What do business owners need to know about the Budget and fleet maintenance services?

A tax break for small businesses

One of the most noteworthy items in the Federal Budget is the immediate deductibility provision for businesses under a certain turnover. Starting July 1, qualifying businesses will be able to deduct the full cost of newly purchased assets under $20,000 from their income. This step builds on last year's asset write-off by increasing the qualifying threshold from a turnover of $2 million to $10 million. SMEs have until June 30, 2017 to take advantage of this program, after which only assets under $1,000 can be written off.

Qualifying businesses can deduct the full cost of new assets under $20,000 from their income.

This move is set to lower the tax burden on companies while also growing their cash flow. More importantly, it provides a viable way for businesses to acquire assets that were previously cost prohibitive, like cars. As there is no limit to the number of assets that can be purchased and written off - so long as each is under $20,000 - this is an excellent way for companies to build or expand a fleet of business vehicles.

The extended write-off program seeks to help drive small business growth, according to Treasurer Scott Morrison.

"Small and medium businesses are driving jobs growth in Australia and must continue to do so. They are also overwhelmingly Australian owned and more likely to reinvest their earnings in future growth, as they seek to build their businesses," he said in the Budget speech.

Sales of business vehicles are up

The sales of vehicles for commercial purposes may already have been boosted by the write-off program, as companies with less than $2 million in turnover have been able to participate since 2015. April figures from the Federal Chamber of Automotive Industries (FCAI) show strong year-on-year growth.

Sales of light commercial vans were up nearly 33% for April 2016.Sales of light commercial vans were up nearly 33% for April 2016.

For business purchases, sales are up for light commercial vehicles, passenger vehicles and SUVs compared to April 2015 - 32.6%, 15.6% and 15.2%, respectively.

"The changes announced in the Federal Budget...could further encourage business purchases of new motor vehicles," noted Tony Weber, chief executive of FCAI.

How can fleet management software assist?

It is important that fleet managers keep up-to-date and accurate records.

Obtaining or expanding a vehicle fleet for businesses shouldn't create more hassle; it should help businesses rather than hampering them. In order to ensure that vehicles remain a positive investment, fleet managers can get a helping hand from the right software.

While there are a number of ways that fleet management software can be helpful in daily operations involving company vehicles, it can also be invaluable when it comes to maintaining proper records. After all, according to the Australian Taxation Office (ATO), certain concessions only apply to vehicles used for business purposes.

In order to verify that vehicles are being used as claimed, it is important to keep accurate and up-to-date records. The ATO recommends that the following information be logged for a minimum of 12 weeks after obtaining a vehicle:

  • The date of any trips taken.
  • The purpose of each trip.
  • The odometer reading at the beginning and completion of each trip.
  • How many kilometres the vehicle was driven.
  • The purpose of each trip.

Keeping track of this information is hassle-free with fleet management software. Contact Smartfleet today to learn more about how we can make operating a company fleet stress-free and easy.