HI Everyone Just after a bit of advice. I run an online business and im looking for ways to reduce the huge amount of tax I pay as I basically have no write offs. I was thinking of purchasing a brand new car so I can write this off. My profit last year was $28K and im currently registered for gst however my turnover will be less than 75K next year. I also have a full time day job so this bumps up my income and I end up paying a heap of tax. Im guessing buying a car to goto the post office and do usualt bussines trips etc I could potentially save a fair bit of tax payable. Im just wondering do I have to buy before 30th June and will I be able to claim it as a deduction for this tax year or will I have to wait till next year? Im looking at buying a kia cerato $19999 would rather a new commodore but im guessing then I can only depreciate 15% each year?
Thanks
You need personal tax advice. Changes in the budget propose to eliminate some ways car expenses are calculated for deductions. You would need a logbook.
Based on the logbook the cost inclusive of GST would be reduced by the % of GST you may be able to claim. Then that cost would be reduced further by the private use portion of use.. So lets assume a $22K car with a logbook showing 20% private use:
$22,000 Original cost
$ 800 80% of say $1k rego / CTP as deduction
$21,200
1,600 80% of $2K GST
$19,600
3,920 20% private use adjusted
$15,580 Deduction available
Thereafter you would also deduct 80% of all costs EXCEPT depreciation. The car has no depreciable value. Note that this issue comes with a catch. If the car is sold - GST applies. If the car is sold/traded in you would also have an assessable adjustment. If the car ceases to be used for business use a GST adjustment occurs to repay some of the GST claimed AND the depreciation write off claimed.
The write-off is based on a car paid for and delivered within the tax year. Subject to it being passed as law too.
