Car dealers push for a second chance on budget

The car industry is lobbying for a tweak to new tax arrangements in the budget that could put money back into tradie wallets.

Motorists in danger of missing out on a lucrative tax concession could get a second chance under a proposal by the car industry. 

Car dealers are lobbying Treasurer Jim Chalmers to allow business owners who have already ordered a new vehicle to benefit from a scheme allowing them to accelerate the depreciation on assets worth up to $150,000.

Customers are waiting several months - or even a year - to get hold of popular utes. Photo: Mark Bean.

A “temporary full expensing” measure introduced to stimulate the economy during the coronavirus pandemic allows businesses to claim the full tax benefit of a work asset rather than depreciating it over the course of several years – but only if the equipment has been paid for and is in its possession before July 1. 

Chronic supply issues in the car industry have led to buyers being forced to wait months – and in some cases years – for their vehicles to be delivered.

James Voortman, CEO of the Australian Automotive Dealers Association, is pushing for an extension of tax incentives for businesses. Photo: Jamila Toderas

AADA chief executive James Voortman said the government should shoulder some responsibility for vehicle delivery backlogs caused by biosecurity processing delays at Australian ports. 

“There are so many businesses that have ordered a ute, truck or van with expectations that they could have used instant expensing or asset write-off,” he said.

“Many of the delays have surfaced because of factors beyond their control.

“We think it’s only fair that they get some consideration or dispensation for vehicles ordered many months ago.”

Letters from the AADA to Treasurer Jim Chalmers and Small Business Minister Julie Collins list concerns with changes to the instant asset write off and accelerated depreciation packages scheduled to end on June 30.

@davemotoring

Shopping for a new car? Buckle up, you might be in for a bumpy ride as businesses look to cash in on lucrative incentives that end in June 30. More in today’s @The Daily Telegraph #budget#auspol#cars#commerce#business#news

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Treasury has been contacted for comment.

The AADA has asked that businesses that buy a work vehicle before June 30 are “able to claim the accelerated depreciation irrespective of when they have taken delivery”.

“As you may be aware, all vehicle manufacturers, to varying degrees, suffered delays in production because of a post-pandemic computer chip shortage,” the letter said.

Biosecurity requirements have contributed to port congestion and long delays for new cars. Photo: Ben Stansall / AFP

“While vehicle production has now started to recover, new vehicle supply has more recently experienced further delays caused by the requirement for quarantine checks at Australia’s ports.

“The effect of these delays, the degree of which is unprecedented, is that many customers are still awaiting delivery for new cars, vans, utes and trucks they ordered many months ago and it is common to hear stories of customers waiting for more than one year for their new vehicle. 

“Dealers are now sitting with the significant order books, many of which are scheduled to be delivered to small business customers, which were due to make use of investment incentives.”

Some manufacturers, including Mitsubishi, Mazda and RAM Trucks Australia, sourced additional stock of in-demand vehicles to make sure customers could take delivery of cars before June 30.

Mazda spokesman Angus Thompson said the brand had prepared for a buyer rush as the end of the financial year approached.

“Mazda Australia managed to secure record levels of Mazda BT-50 inventory leading into EOFY. Our dealer network around the country received large volumes in April, and will continue to receive high levels of inventory throughout May and June, which will be available for delivery prior to June 30th,” he said.

Toyota is struggling to maintain supply of the HiLux to meet demand.

Others, such as Toyota, have been hamstrung by significant production delays.

Toyota’s deliveries for the first quarter of this year are more than 23,000 cars behind the same period last year.

Originally published as Car dealers push for a second chance on budget