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The ‘massive game-changer’ hiding in plain sight for Aussie businesses

Published: (Updated: ) in Australian News by .

While record levels of debt and swathes of personal tax cuts dominated coverage of the 2020 Federal Budget last night, the real big ticket item for Aussies may have been lying in plain sight.

While record levels of debt and swathes of personal tax cuts dominated coverage of the 2020 Federal Budget last night, the real big ticket item for Aussies may have been hiding in plain sight.

Labelled "Temporary Full Expensing", the Federal Government will allow businesses over a two-year period to deduct the full cost of eligible assets of any value.

The real clincher is the size of the businesses that will be allowed to do this, as the government has opened up the eligibility to businesses with turnover of up to $5 billion.

READ MORE: Winners and losers from the budget

More than 11 million Aussies are set to receive a tax break.

That means massive companies – companies like Sydney Airport (turnover ~$1.6 billion) or Westfield owner Scentre Group (turnover ~$2.6 billion) - can bring forward real spending.

Let's put that into real terms.

A bus company could buy a whole fleet of new buses, and have their entire cost reimbursed as part of their tax return.

Farmers could update entire lines of machinery and factories could purchase entire new productions lines that would be essentially paid by the taxpayer.

READ MORE: How the budget tax cuts will affect you

Tradies who run their own businesses could buy a brand new ute and provided its sole use is for business, could be reimbursed for the entire cost of the car come tax time next year.

Susan Franks, senior tax advocate with Chartered Accountants Australia and New Zealand, said the new measure is "massive" for businesses that may have already been planning to upgrade their equipment – but it's not a free-for-all for every asset under the sun.

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"It is a massive game-changer," Ms Franks told

"The government have used the definition eligible depreciation assets – so you can think of your plant and equipment, things like new computer systems.

"Large business can certainly benefit from this but it won't be on land and buildings, it will be on eligible plant and equipment."

READ MORE: A two-minute guide to the budget

A large focus for many small businesses, particularly tradespeople, will be whether they can use the new measure to purchase tools and equipment, and maybe even upgrade the worksite ute.

The incentive to do this is so strong that automotive analysts believe the 2020 budget measures will directly impact new car sales.

"Australia's tradies were definitely in the 'win' column in this week's Budget. There will be more work, and more tax breaks to help keep self-employed tradies and employers not only in business, but spending on new equipment," motoring analyst Paul Maric told

"This will have a direct impact on new ute sales. While overall new car sales have declined month-on-month over the past two years, ute sales have increased.

"Tradies heading to the new car yards this week will likely have to get in line for one of the more popular ute models, which were already in heavy demand before the new tax cuts were announced."

READ MORE: What you might have missed in the 2020 federal budget

1: Toyota Hi-Lux

But before you rush to the car yards, there's a word of warning: you still need to have access to capital to buy that shiny new dual-cab in the first place – and it needs to make sense that it will add to your business's revenue over time.

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"If they've got the cash to splash, they certainly could be splashing it on a brand new ute. But before small businesses in particular think about utilising this they really need to think about their business viability," Ms Franks said.

"They need to know what their business strategy is, what their cash flow is going to be like and what their finance is like.

"There's not much use going out and buying a ute if you can't actually pay for it – or you can't actually borrow the money to pay for it."

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Source: 9News

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