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Why now is a great time to buy or upgrade dental equipment

Supplier promotions and government initiatives can make investing in new equipment an attractive option.

Running a dental practice can be challenging at the best of times – especially if you’re concerned that your equipment may not be up to scratch.

While the decision to upgrade your dental equipment is a big one, if it improves the level of patient care, productivity and profitability, it may be worth considering the investment. New equipment may also enable you to update your marketing strategy so you can entice new customers with your practice improvements and any new services you’re now able to offer.

Being savvy about when you buy is key, says senior finance specialist Luke Truscott from BOQ Specialist. “Upgrading equipment can be an investment, but you can make savings if you do it at the right time, or take advantage of Government incentives,” he explains.

Here are some strategies which might make buying or upgrading your equipment easier.


Take advantage of trade show offers

A big drawcard for dentists—especially those considering capital investment—is the annual ADX trade show held by the Australian Dental Industry Association. This event has the latest innovations, technologies and techniques for dentists, and includes the Australian Dental Industry Awards.

“It’s packed with suppliers and exhibitors showcasing the new equipment or new technology they may be bringing out,” says Luke, “and there are usually a lot of  ‘limited time only’ or ‘show only’ promotions and specials that dentists can take advantage of.”


Instant asset write-off

Taking advantage of the Government’s instant asset write-off scheme could also help you with capital expenditures—and may result in a lower tax bill to boot.

“When the scheme started, if you were an eligible business owner with less than $10 million in turnover, you could purchase a piece of equipment costing under $150,000 and immediately write that asset off, instead of depreciating the asset over a period of years,” says Luke.

“If you purchased a piece of dental equipment for $100,000, for example, the instant asset write-off scheme would allow you to take a tax deduction for the full cost of the asset in that year, rather than over a number of years,” he explains. “This effectively lowers your taxable income earlier and means you’re not going to pay as much tax in that year.”

However, an extended version of the scheme (known as the temporary full expensing incentive) has meant that since 6 October 2020, the instant asset write-off threshold of $150,000 doesn’t apply so there’s no cap on asset purchases. This incentive is also available until 30 June 2023. “To tap into this initiative, you just need to have an aggregate turnover of under $5 billion, which covers almost all dentists” adds Luke.


SME Guarantee Scheme

Another scheme that dentists may wish to look into when financing equipment or upgrades is Phase Two of the Government’s SME Guarantee Scheme, which aims to provide small and medium enterprises (SMEs) with access to a range of funding to help them adapt to their new operating environment, or invest in their business for the future.

“Under the Scheme, a client can use the loan for a broad range of business purposes, including purchasing a big-ticket item — a piece of capital equipment such as a CBCT system or CAD/CAM technology, or something that perhaps they couldn’t purchase before. The Government guarantees 50% of the loan, so the benefit to the dentist is that they receive a lower interest rate on the loan. This Scheme ends on 30 June 2021 and eligibility criteria is applicable.”


Types of finance options

Dentists considering equipment upgrades may wonder which method is best for purchasing equipment—buying it outright, or financing it with a chattel mortgage facility?

“A lot of dentists use a chattel mortgage facility to finance their equipment purchases, so they can leverage off Government initiatives such as the instant asset write-off scheme or temporary tax incentive. Also, under a chattel mortgage, they’re the actual owner of the equipment. Because of that, they can instantly write off the asset and claim GST benefits.”

You can still take advantage of the instant asset write-off option if you buy outright, he adds. “However, you’re not leveraging the low interest rate environment available at the moment, and financing those big-ticket items also enables you to use your cash for other expenses or investments”.

In conclusion

There have been so many advancements in technology and dental innovations in recent years, and patients are looking for dental clinics that offer quality, cutting-edge treatments that save them time, says Luke.

“Plus, having up-to-date infection controls, especially post-COVID, shows you’re committed to having a safe environment for patients,” he adds, “Investing in updated equipment could mean you’re potentially one of the first in your area to offer that technology to your patients.”

Before upgrading any of your dental equipment, you may wish talk to your accountant and a financial advisor for advice on your particular circumstances.

 

To make the most of the temporary tax incentives take a look at our equipment finance options, or contact one of our financial specialists today on 1300 160 160.

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  • Important Information

      The issuer and credit provider of these products and services is BOQ Specialist – a division of Bank of Queensland Limited ABN 32 009 656 740 AFSL and Australian credit licence no. 244616 (“BOQ Specialist”). Terms, conditions, fees, charges, eligibility and lending criteria apply. Any information is of a general nature only. We have not taken into account your objectives, financial situation, or needs when preparing it. Before acting on this information, you should consider if it is appropriate for your situation. BOQ Specialist is not offering financial, tax or legal advice. You should obtain independent financial, tax and legal advice as appropriate.