The ongoing global shortage of electronic components is continuing to wreak havoc on the electronics market in 2021. While some products are stocked in well enough to continue supply, others are facing very long and uncertain delays. There are barely 6 weeks left to the end of financial year (EOFY), and stocks are limited, so now is the time to act if you’re planning to buy equipment and write it off on your 2020-21 tax bill.
Global Component Shortage Update
A number of separate incidents around the world have caused ongoing shortages of silicon chips on world markets. The severe snow storm in Texas took down power networks which forced manufacturing plants to close; a massive shortage of clean water in Taiwan forced semiconductor manufacturers there to also restrict their production; fires in Japanese electronics factories caused outages; and ongoing COVID related lockdowns and reduced flights have further impacted the manufacturing and distribution of IC’s globally.
At the same time, the demand for semiconductor products has surged, resulting in a major shortage across the globe.
All of this has caused prices to rise, and it is also causing very long delays in production of some electronic equipment.
For example, a common industrial motherboard manufacturer has been unable to source the audio chipset required on many of their boards. Supply may be pushed back towards the end of 2021, so in the mean time they have adapted by offering a variant of the board without the audio chip, for those who don’t require it.
Australian Government Continues Instant Tax Write-Off
In the recent Australian Federal Budget, it was announced that the instant tax write-off arrangements for new equipment purchased by businesses, will be extended another year. You might think that this means you can relax and wait until next year – but think about how the tax write off works. If you make a purchase now, before July 2021, you can write it off in this financial year. If you leave it until later, then you have to wait another year to write it off against your company tax.
However to claim the tax offset, you will need to have purchased the equipment before 30 June 2021 – so time is running out, especially in the face of the global electronics shortages. (* Please speak to a qualified tax advisor for advice – we are not accountants, and this article must not be construed as financial advice.)
At the time of publishing, we are just under 6 weeks away from the end of June. That’s not a lot of time for companies to decide on new equipment, place their orders, and receive delivery.
If your company wants to claim a tax deduction in FY 2021, there’s no better time than now to get things moving. Esis can still supply many products ex stock either locally or overseas – so contact us now to discuss your needs and find out the best solutions.