Get it before it's gone
As anyone in the marine game knows, the industry has been through something of a storm this year (and that refers to more than the battering endured by exhibitors at the Sanctuary Cove Boat Show). Global recession and job uncertainty have kept many buyers out of the market.
Yet key economic data is pointing to better than expected trading conditions in the immediate future. Unemployment rates have proven to be lower than predicted, with figures released early October showing a drop to 5.7 per cent, whereas many economists had actually predicted an increase.
At retail level, economic research suggests consumer confidence has increased, as more consumers are feeling secure about their jobs. Analysts believe that renewed confidence will soon return to the boating industry, so the Investment Allowances come at an opportune time for the marine businesses looking to increase their capabilities.
Investment Allowances are, in brief, a one off tax deduction on top of what you can already claim on various assets. For businesses turning over below $2 million, the Investment Allowance was 50 per cent. For businesses turning over $2 million and above, there was the 30 per cent Investment Allowance earlier this year. There is now an extended second chance that is open until December 31, 2009. This extension provides an Investment Allowance of 10 per cent.
Eligible purchases include new and demonstrator vehicles and equipment; major upgrades to existing equipment, including new computer hardware and engineering equipment; new parts and service vehicle; and even upgrades to heavy equipment like lifting gear a slipway.
Businesses that meet the order or purchase deadline of December 31, 2009, need to remember that the equipment must be installed and ready for use by December 31, 2010.
Businesses with a turnover greater than $2 million, which have already placed their order by June 30, 2009, must have the equipment installed and ready for use by June 30, 2010, if they are to qualify for the initial 30 per cent allowance.
Interest rates have also risen by a quarter of a percent, and the Reserve Bank of Australia hints that more increases are on their way.
Mark O’Donoghue from Finlease also warns that companies shouldn’t just accept any finance solution. “The only option is a Chattel Mortgage where you become the owner of the asset from day one. If you were to fund your purchase with a Lease or Commercial Hire Purchase (CHP), you run the risk of having your investment allowance claim denied,” he said.
This article was prepared by Finlease, a major finance broker in the marine industry. Further information can be found at www.finlease.com.au.
PIC: Mark O’Donoghue