NAB data shows what is being bought for instant asset write-offs

Businesses have gone on a spending spree to take advantage of the instant asset write-off scheme - even splurging on helicopters.

Businesses have gone on a spending spree to take advantage of the federal government’s extended instant asset write-off scheme, splurging on bakery machines, coffee makers and even helicopters.

National Australia Bank figures shows equipment spending at the end of April jumped 24 per cent year-on-year across its business customers as firms sought to take advantage of the tax minimisation scheme.

The Morrison government extended the scheme in last week’s federal budget until 2023 and allows an immediate deduction of the business portion of the cost of an asset.

NAB business bank executive Michael Saadie said the extension was in part to boost productivity and efficiency throughout the economy.

“One of the reasons why the government extended it was to keep the momentum in the economy going,” Mr Saadie said.

NAB Business Bank executive Michael Saadie says the scheme aim to maintain economic momentum. Picture: Supplied via NCA NewsWire

NAB found purchases of cars and light commercial vehicles rose 132 per cent over the year to April, while buying of manufacturing equipment including bakery, fridges and hospitality equipment lifted 133 per cent.

It also discovered aircraft purchases such as helicopters and planes had increased by 97 per cent compared to one year ago.

Since the extension of the scheme, equipment purchasing demand had been a major influence in the heavy lack of supply for certain items such as cars, Mr Saadie said.

Both new and used car markets have had major supply shocks since the start of the pandemic, with shipping disruptions playing a role.

“If you talk to any tradesperson who are trying to buy a new work vehicle, the degree of choice has been minimised,” he said.

“It is putting more price escalation into the used car market.”

NAB says there has been a 24 per cent jump in business equipment purchases in the past year. Picture: William West/AFP

Mr Saadie noted the surge in demand had fuelled debate about bringing more manufacturing back to Australian shores.

“We are certainly seeing a lot more local manufacturing in the supply chain while the supply chains are being disrupted (from COVID-19),” he said.

The federal government has set aside close to $17.9bn in associated costs for the extension of the instant asset write off scheme over the next four years.

Mr Saadie said the scheme had also created a new side-industry of refurbishing old equipment for the purpose of reselling.

He also noted a number of firms were using the scheme to update office spaces in an attempt to attract workers back into CBD offices.

Originally published as NAB data shows what is being bought for instant asset write-offs