THE extension of the instant asset write-off until the end of the year is “great news” for car retailers but dealers need to put in place strict procedures for sales staff to make sure the dealership does not let any qualifying business buyers slip through their fingers.

This is the view of KPMG Motor Industry Services which has prepared commentary to guide dealers to make the most of the federal government’s move to stimulate vehicle sales for an additional six months.

The national lead of KPMG MIS, Steve Bragg, told GoAutoNews Premium that while many businesses would not be in a position to take advantage of the instant write-off, dealers should be developing specific strategies to put their offerings in front of tradies and others in the construction industry.

“Dealers need to focus on the tradies and the construction industry.

“This sector has been going well since the pandemic started.  They have still been working all the way through and are perfectly situated to benefit from the instant asset write off.

“I would market to them specific ute model lines with tradie packs and bundle these packs with any special finance packages available,” Mr Bragg said.

Joel Shashoua, a director of KPMG MIS, told GoAutoNews Premium that every member of the sales team, including in the used car department, should be briefed on how the offer works and the benefit to the buyer (without offering tax advice).

“Make sure sales teams are briefed on the offer (but don’t give tax advice) and make sure that every customer is aware of the program.

“It is really important to find out early in the sales process whether the customer owns a business.  This should become part of any initial need analysis. Are they aware of the scheme? Encourage them to seek advice on their tax position if they are eligible buyers.

“This is especially important for all commercial vehicle customers.”

Mr Shashoua said that dealers should round up as many of their customers as possible who potentially qualify for the write-off.

“They should send an electronic direct mail (EDM) to all customers in their database advertising the program.  Emphasise that supply of vehicles may tighten up prior to year end due to COVID and they should get in early to secure a vehicle.

“It is especially important to create marketing collateral highlighting the writeoff placed around the dealership, and online, to notify customers of the offer,” Mr Shashoua said.

Mr Shashoua summarized the offer this way:

• The current “Instant asset write off” program from the government has been extended past 30 June now until 31 December
• The program allows eligible businesses to claim the depreciation amount in one hit rather than gradually over a multi-year period.
• The total amount to claim for cars is $57,581 – anything beyond that cannot be claimed.
• For further information beyond this the customer should seek their own tax advice.

Meanwhile, Australia’s main industry bodies say that extending the $150,000 instant asset write-off by six months (limited to $57,581 in the case of motor vehicles) will help the auto industry on its road to recovery by attracting new business.

In welcoming the extension, now pushed back to December 31, industry bodies said it was a welcome relief to the car industry that had been struck by 26 months of declining new-vehicle sales and the effects of COVID-19.

The Australian Automotive Dealers Association (AADA) said it congratulated the government and said the move would help the industry recover and encourage businesses to invest during a time when it was needed by the economy.

AADA CEO James Voortman said, however, that buyers should not lose sight of the fact that June was a great month to buy a vehicle.

“I would urge eligible businesses looking to invest in a vehicle to do so before the end of the financial year as there are some very good deals available,” he said.

He added that the AADA wanted the removal of the car limit of $57,581 which applies to the instant asset write-off.

“There is no justification for a car limit. There are no limits on other goods and we’ll be asking the government to review this,” he said.

The write-off extension is available for businesses with a turnover of less than $500 million with the government predicting 3.5 million businesses will be eligible.

The government said the change was designed to support business sticking with investment they had planned and to encourage them to bring investment forward to support economic growth over the near term.

“The instant asset write-off also helps to improve cash flow for businesses by bringing forward tax deductions for eligible expenditure.

“The threshold applies on a per asset basis, so eligible businesses can immediately write-off multiple assets provided each costs less than $150,000.

“The extension will also give businesses additional time to acquire and install assets, as they will now have until the end of the year.

“Assets can be new or second hand and could include for example a truck for a delivery business or a tractor for a farming business.”

Representation was made to the government by groups including the Victorian Automobile Chamber of Commerce (VACC), Motor Trades Association of Australia (MTAA) and the AADA.

VACC spokesman David Dowsey said the chamber was very pleased with “this common sense decision that took the needs of Australian businesses seriously.”

“It will allow consumers to buy with confidence, while providing a much needed boost for dealers,” he said.

“VACC, on behalf of Victorian Automobile Dealers Association, worked very hard to achieve this change and, as always, VACC’s Michael McKenna was at the forefront of this success.”

MTAA CEO Richard Dudley said today’s announcement was warmly welcomed and thanked Treasurer Josh Frydenberg, Jobs Minister Michaelia Cash, and Industry Minister Karen Andrews, for listening and acting on the advice of the MTAA, members and other industries.

“This is an extremely important ongoing stimulus initiative for Australian small businesses,” Mr Dudley said.

“The government and treasurer have recognised and dealt with issues MTAA has raised regarding the impacts of international production facility shutdowns, delays in distribution and delivery to Australia and how this was making the original June 30, 2020 purchase and implementation deadline impossible to achieve.

“This doubt about delivery before June 30 was negatively impacting small businesses taking up the initiative.

“MTAA provided evidence that brands of tractors, other farm equipment including implements, cars, commercial vehicles and a range of other products including tools and equipment for technicians, motor body repair and other auto industries were facing significant delays.”

The Federal Chamber of Automotive Industries (FCAI) said the extension would kick start the new vehicle market by stimulating new vehicle purchases.

FCAI chief executive Tony Weber said: “We would like to see small businesses follow through on their pre-COVID investment strategies, and replace their older vehicles with new, safer, and more efficient models.

“New car dealerships in Australia employ more than 60,000 people nationally and are significant contributors to community and regional economic growth through employment, training, and philanthropy.

“It’s great to see the federal government’s support for these small businesses through a number of initiatives such as JobSeeker and JobKeeper, and now through the extension of the instant asset write-off program.”

By John Mellor and By Neil Dowling