When the GFC struck Australia back in 2008, Steve and I really felt the pressure; everyone around us was closing up shop, and we weren’t sure what to do. There were so many factors to consider, could we even stay open?
After some discussion, we knew it wasn’t time to cut our marketing spend and halt everything… It was actually an opportunity to help our dealers and buyers more than ever before. So, we decided to stay open and invest more in our products, site functionality, and membership offerings because we knew doing each of these things would help keep machinery sellers in business.
Of course, much is different with COVID-19. Back in 2008, people could still attend trade shows and meet their buyers face-to-face. The world wasn’t in lockdown.
Now, trade shows are being cancelled or postponed in droves, and buyers are self-isolating, which means less showroom visits… less face-to-face contact, less direct opportunities to sell and buy.
Being part of the capital equipment industry, many business owners out there are watching the news with bated breath. Wondering whether it’s time to cut spending, time to pull back and hang tight, and how all this will impact their business.
Of course, I can only discuss things from my experience. But if you asked for my opinion, I would tell you that now is not the time to stop buying capital equipment. The Australian Government’s stimulus package is designed to help keep the machinery industry moving.
The Aus Gov’s 150K Scheme
To help businesses through this tough time, the Australian Government released a $17.6 billion Economic Stimulus Package, where businesses earning an annual turnover of less than $500 million can access incentives, cash flow injections and tax relief.
Prior to the stimulus package, businesses could only write-off equipment purchases (such as concrete tanks, tractors or delivery trucks) up to $30K. Now, that limit has been raised to $150K. That means, if you purchase equipment or machinery for your business, you can claim up to $150K of its price on tax. This is a massive relief for those in the capital equipment industry and is likely to have a positive flow-on effect for the construction, agricultural, and manufacturing industries.
Other Government Incentives
Businesses with an annual turnover of less than $500 million will also be able to access tax relief by being able to deduct 50% of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.
Another great incentive you can take advantage of if your business has an annual turnover of less than $50 million is cash flow assistance. On top of the tax relief benefits discussed above, there is also $6.7B to be allocated to boost cash flow for employers, with a minimum payment of $2000, for eligible small and medium-sized businesses, up to $25,000.
More recently, the Morrison government has released stage II of the stimulus package. What these means for businesses is:
- Tax-free cash payment of up to $100,000, delivered by the tax office as a credit on activity statements from late April (for businesses earning less than $50M annual turnover)
- Unsecured loans of up to $250,000, guaranteed by The Commonwealth for up to 3 years
So, What To Do?
Have a look at the current stimulus packages and see what your business is eligible to receive or claim.
One of the worst things businesses can do right now is tighten their belts—that’s how economies and industries can collapse. We’ve got to keep the markets alive, and there is still plenty of demand for gear out there. Machines4U clocked 450,000 visits in 30 days from people looking to purchase machinery.
These are uncertain times, yes, but now is the time to focus your efforts on your digital showroom, expand your sales to the online space, and buy equipment you need for your business.
At Machines4U, we’ve always been dedicated to helping you buy better and sell faster. And, we aim to continue to do this throughout these trying times.
For more information on the government stimulus package visit https://treasury.gov.au/coronavirus/businesses.