Light truck buyers hit by instant asset write-off cuts

Tradies and other small business owners are now in a race against time to purchase a new or used work vehicle before the end of this financial year, following the federal government’s move to slash the instant asset write-off threshold to just $20,000 as part of the 2023-24 budget.

From June 30, the generous tax break that currently allows companies with an annual turnover of less than $5 billion to purchase a work vehicle or other asset up to $150,000 (or $65,000 for vehicles with a payload under one tonne) and claim the full deduction in the first year (rather than over several years) will plummet to $20,000, removing utes and other vehicles from the equation.

The timing is unfortunate given the car industry is suffering crippling supply shortages for new vehicles and customers are facing long waiting times, which was to some degree fuelled by the instant asset write-off scheme introduced in 2020 during the height of the COVID-19 pandemic.

It has proven to be an incredibly popular incentive for tradies and other buyers, who can still purchase a vehicle for work purposes after June 30 but will need to spread the deductions over three years.

What’s more, RedBook general manager Ross Booth has warned that the lack of availability of new vehicles could put upward pressure on used vehicle prices in the short-term as buyers turn their attention to near-new replacements over the next seven weeks.

According to Booth, there simply isn’t enough new commercial vehicle stock available in showrooms across Australia to trigger a last-minute sales rush in the lead-up to June 30, despite several brands such as Isuzu boasting pre-pandemic levels of inventory.

There is, however, a vast number of options in the used vehicle market – as shown by the listings on trucksales.com.au – where inventory has been steadily rising and prices have been stabilising.