$20000 accelerated deduction

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
 
I know but brand new vs second hand? Just wondering is this going to be worthy of me doing we could do with a new car and as said before I have basically no write offs so it seems like the smart thing to do.
 
Well technically no I have a car well it has 240,000 klms on it so it wont last forever it would be nice to have a brand spanker I could really rely on. At the moment I have no deductions apart from $3500 ( car max allowed to claim no receipts as I have been slack ) apart from that my deductions are worthless. I would use the car to drive to the post office and home 5 days a week. Also occasionally go to the courier depot to pick up urgent parcels and shops sometimes to buy supplies to undertake my business and also local deliveries ocassionally.
 
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.
 
Well technically no I have a car well it has 240,000 klms on it so it wont last forever it would be nice to have a brand spanker I could really rely on. At the moment I have no deductions apart from $3500 ( car max allowed to claim no receipts as I have been slack ) apart from that my deductions are worthless. I would use the car to drive to the post office and home 5 days a week. Also occasionally go to the courier depot to pick up urgent parcels and shops sometimes to buy supplies to undertake my business and also local deliveries ocassionally.

I'd suggest it would be cheaper to get a cab to the post office once a day, than buy a car to do so. But that won't get you max tax deductions - I suggest buying a car at no less than $300k.
 
I know but brand new vs second hand? Just wondering is this going to be worthy of me doing we could do with a new car and as said before I have basically no write offs so it seems like the smart thing to do.

12 months old, say 10-20,000kms that's already had a hit of depreciation, vs a Korean built down to a headline price.

In 6 months time you will have either a 2nd hand kia or a 2nd hand commodore.
 
12 months old, say 10-20,000kms that's already had a hit of depreciation, vs a Korean built down to a headline price.

In 6 months time you will have either a 2nd hand kia or a 2nd hand commodore.

Depends what the logbook % is. New rules mean no logbook may mean zero deduction. Just remember that the write off is exactly that. Next year no deduction. Then what ?
 
Depends what the logbook % is. New rules mean no logbook may mean zero deduction. Just remember that the write off is exactly that. Next year no deduction. Then what ?

suggest using the tax saved to buy something else? A fancy new apple mac... new furniture for the home office, piece of art for the office wall, mont blanc pen, bose noise cancelling head phones for use whilst working and business travel... am sure something can be thought of?

or an awesome sound system for that new car? roof racks, window tint etc?
 
Really would like a car though. I basically have no other deductions... taxi to the post office seriously... arent taxis these days $5 per 30 seconds thats how I remeber them anyway about 15 years ago.
 
Really would like a car though. I basically have no other deductions... taxi to the post office seriously... arent taxis these days $5 per 30 seconds thats how I remeber them anyway about 15 years ago.

oh my answer was in reply to Paul, as in what do you do next year. This year car, use the tax saved to buy something else next year.

taxis would not be practical. You would spend half your life just waiting
 
oh my answer was in reply to Paul, as in what do you do next year. This year car, use the tax saved to buy something else next year.

Just remember next year if you trade the old car the whole of the proceeds for trade in ADDS to income (and subject to GST). The $20K "gift" comes with conditions.
 
Just remember next year if you trade the old car the whole of the proceeds for trade in ADDS to income (and subject to GST). The $20K "gift" comes with conditions.

yes buyer would be best to keep the car indefinitely, then use the money saved from tax this year to buy more qualifying assets next year. or trade the car next year on another qualifying car.

of course the real kicker would be if you bought something that generated income. no idea what... vending machines, ATM dispensers etc. Then you use that deduction from this year, plus the income to buy more assets next year. Then buy the non income producing assets in the final days of scheme. Or if you are cashed up do both.

Hockey is right, this is an incredible gift for small business.
 
Back
Top