End of Financial Year: 3 Strategies to reduce taxable income with an unsecured business loan
With the End of Financial Year (EOFY) being just around the corner, it’s a good time to start thinking about ways to effectively reduce your business’s taxable income.
While keeping business expenses in check might be second nature to you, now is the time to increase your business expenses since it’s one of the most effective strategies to maximise tax deductions and therefore reduce taxable income. And this means more cash for you to invest back into your business instead.
So, what’s the best way to invest into your business while also making the most of tax deductions? The EOFY period is a great time to buy discounted business assets or equipment that you can write off of your tax bill. After all, investing money into your business is so much more valuable.
Getting business funding might seem like a counterintuitive approach when it comes to maximising your business’s tax deductions. However, an unsecured business loan can be a handy facility that provides fast access to working capital, which you can use for business related purchases. This way you won’t miss out on the opportunity to claim more tax deductions on eligible business purchases and therefore reduce your taxable income before the end of the financial year. It’s a win win!
So, what makes an unsecured business loan so attractive for small business owners? An unsecured business loan is more accessible and flexible than a secured business loan. Generally you won’t need any collateral such as property or vehicle to get a loan approval for an unsecured business loan. In addition, you can apply online in minutes with only your bank statements being required, aka “Low Doc” business loan application. At Lumi you can apply for up to $150,000 Unsecured and Low Doc.
Here are 3 strategies to reduce taxable income with an unsecured business loan
1. Take advantage of the instant asset write-off incentive
The Australian government launched various initiatives to support SMEs including the instant asset write-off incentive, which has been extended as part of the Federal Budget 2021-2022. The government frequently updates laws and regulations based on the fluctuations of the economy, so make sure you stay on top of the latest developments via the ATO website. This will help you understand how to maximise tax deductions for your business. If you’d like to read more about the latest tax incentives read our blog article Federal Budget 2021-2022: 4 business tax incentives that can help your SME grow.
So, how does the instant asset write-off incentive work?
Before the government launched this initiative businesses could depreciate a certain percentage of the cost of business assets each year over a certain period of time, based on how long they would use the assets for. Now, with the instant asset write-off incentive eligible businesses can claim a lump sum for eligible business assets, provided the assets were purchased, first used or installed before the end of the financial year. In addition to that the government also removed the asset value limit for eligible businesses.
Essentially, the instant asset write-off incentive makes it easier to claim tax deductions for your business assets and therefore helps to reduce your taxable income. This means that you will have to pay less tax for the financial year during which you bought, installed and first used the claimed assets.
Now you might wonder how you can get access to capital in order to afford these business assets before the EOFY…That’s where an unsecured business loan can come in handy. If you’ve got your wish list of asset purchases ready to go, speak to your accountant or tax professional first and confirm that your business is eligible for instant asset write-off and under what threshold.
Afterwards you can apply online for an unsecured business loan with Lumi in a few minutes. All you need for your online business loan application is your ABN/ACN, min. 6 months in business and min. $5K monthly turnover. The clear advantage of an unsecured business loan is that you won’t need any security such as collateral. Most importantly you will receive an application outcome within a few hours and funding on the same business day is also possible.
2. Invest into your business now, pay your loan back later
In case you are considering a business loan to afford asset purchases in order to make the most of eligible tax deductions this EOFY, but are worried about the financial pressure of the ongoing repayments, Lumi’s got your back.
Enjoy a 6-week Payment Holiday* when you get a loan that’s settled before 30 June 2021.
So, if you get approved for an eligible small business term loan with Lumi, you will only start your repayments 6 weeks later. This can help you to purchase business assets before the EOFY with peace of mind that your repayments won’t start until the next financial year.
3. Get the biggest bang for your buck with EOFY deals
A lot of retailers are actively promoting specific deals during the EOFY period so you can get the best value for money during this time. Getting capital with the help of an unsecured business loan at this time of year can therefore get your business more assets from your wish list and reduce your taxable income at the same time. That’s cash that you can directly reinvest back into your business.
Wondering what asset purchases are eligible for tax deductions? Think about assets your business needs that lose value over time such as:
- Business vehicles
- Equipment, tools and machines
- Tech & hardware for business use such as air conditioners, laptops, printers, mobile devices etc.
- Office or shop supplies and furniture
- Marketing material such as signage
Make sure you check with your tax professional about the latest updates on tax deductible assets before making any purchases to avoid disappointment.
To help your business thrive Lumi is offering The Biggest Bang For Your Buck This EOFY including:
Fast access to unsecured finance up to $150,000
6-week Payment Holiday*
$500 voucher* that you can use for asset purchases at selected retailers when you get an eligible business loan with Lumi before 30 June 2021
Head to the Lumi website for more information on our EOFY offer and its terms & conditions.
If you have any business assets you’d like to purchase before the end of the financial year and are in need of business funding, get in touch via phone on 1300 00 5864 or email us at firstname.lastname@example.org.
Your Lumi team
*T&Cs and eligibility criteria apply. Offer ends 30 June 2021.