Most tax effective and legal way to fund purchase of a grand piano

[jingo]

I was going to put this under the accounting/tax section, but it isn't related to buying property!

I'm hunting around for a grand piano and as my accountant is away, need some advice on how best to finance this. I am a piano teacher/accompanist and would use the instrument at home to practice the repertoire that I need to prepare for work. I don't teach from home and don't intend to.

Am I able to:

1. Use one of our lines of credit that is secured by one of our Ip's to fund the purchase and legally claim the interest? Or would I be best to secure a loan separate to our properties?

2. Depreciate the instrument annually in my tax return.

3. Is it best to pay cash?

Any ideas greatly appreciated.

Regards Jason

 

[Terry_w]

I was going to put this under the accounting/tax section, but it isn't related to buying property!

I'm hunting around for a grand piano and as my accountant is away, need some advice on how best to finance this. I am a piano teacher/accompanist and would use the instrument at home to practice the repertoire that I need to prepare for work. I don't teach from home and don't intend to.

Am I able to:

1. Use one of our lines of credit that is secured by one of our Ip's to fund the purchase and legally claim the interest? Or would I be best to secure a loan separate to our properties?

2. Depreciate the instrument annually in my tax return.

3. Is it best to pay cash?

Any ideas greatly appreciated.

Regards Jason

1, Yes. It would be a work related expense, so as long as you don't use it for private reasons - personal pleasure??? - the interest on money borrowed to buy one should be deductible.

2. Yes.

3. Not if you have non deductible debt.

What are they worth?

 

[jingo]

1, Yes. It would be a work related expense, so as long as you don't use it for private reasons - personal pleasure??? - the interest on money borrowed to buy one should be deductible.

2. Yes.

3. Not if you have non deductible debt.

What are they worth?

Thanks Terry,

Greatly appreciated.

Regards Jason.

 

[lizzie]

You would also have to be prepared to defend why you bought a grand piano instead of a standard (and cheaper) one, if it is for practice only and not concert.

 

[jingo]

You would also have to be prepared to defend why you bought a grand piano instead of a standard (and cheaper) one, if it is for practice only and not concert.

Ok, good point Lizzie. Think I can defend this.

I would say that my job involves me performing on grand pianos (which it does). Grand pianos have more heavily weighted keys. In order to perform effectively on a grand (and to the standard my work requires) I need access to one on a regular basis.

But, yes, good point Lizzie and may be difficult for a non musician/pianist in the tax office to understand!

Regards Jason.

 

[Macca]

It may be best to have your accountant get a ruling from the ATO on this.

Give a similar explanation of the need to have a grand piano at home as you have done here.

 

[Propertunity]

1, Yes. It would be a work related expense, so as long as you don't use it for private reasons - personal pleasure??? - the interest on money borrowed to buy one should be deductible.

^ ^ what Terry said. You'd have to make sure it was 100% used for work and not derive any personal pleasure from it, otherwise you'd have to apportion a % for work and a % for private use.....and this might be more believeable in any event.

I'd suggest you keep a diary for 3 months (like a car log book) to prove it is only being used 100% for work and is necessary for deriving an income.

 

[moyjos]

I agree it is a business expense as listed above.

Do you claim the floorspace the thing is on as business premises??

I don't reckon the "personal use" thing is too much of a problem, as long as you derive your major income from said piano....after all I am currently typing away on a "work" computer...am I gaining personal pleasure from it
Hubby sometimes uses a drill or hammer from the ute to fix something at home...personal use??

 

[Propertunity]

Do you claim the floorspace the thing is on as business premises??

Ah ha yes - I love it. Claim the floorspace that the piano takes up.

I don't reckon the "personal use" thing is too much of a problem, as long as you derive your major income from said piano....after all I am currently typing away on a "work" computer...am I gaining personal pleasure from it
Hubby sometimes uses a drill or hammer from the ute to fix something at home...personal use??

Strictly speaking, any 'personal use' of things like mobile phones, work computers etc., does attract FBT unless the employee makes a contribution for it.

 

[Aaron Sice]

i would have thought it would need to be housed in your dedicated home studio/office, with said studio/office registered witht he local council, a small sign out the front of your house compliant with your local planning laws advertising your services and the usual website/abn/gst registration etc etc.

you would need to cover any "intent to defraud" accusation with every t crossed and every i dotted.

 

[cu@thetop]

Become a paid piano instructor.

 

[vaughan]

Become a paid piano instructor.

I am a piano teacher/accompanist and would use the instrument at home to practice the repertoire that I need to prepare for work. I don't teach from home and don't intend to.

Think about leasing the piano. All the costs may then be deductible if work related.

 

[jingo]

Think about leasing the piano. All the costs may then be deductible if work related.

Thanks Vaughan,

That isn't a bad idea. I had thought of it, but haven't crunched the numbers. I will run the idea through my accountant on Monday.

 

[jingo]

Become a paid piano instructor.

Hi cu@thetop;926746,

Technically, I am a paid instructor - just the school pays my salary and I don't teach from home on the instrument that I would be purchasing. But, would certainly be using it for preparation of material that I use at work, if that makes sense.

Regards Jason.

 

[jingo]

i would have thought it would need to be housed in your dedicated home studio/office, with said studio/office registered witht he local council, a small sign out the front of your house compliant with your local planning laws advertising your services and the usual website/abn/gst registration etc etc.

you would need to cover any "intent to defraud" accusation with every t crossed and every i dotted.

Thanks Aaron,

I shall investigate this further with my accountant.

 

[jingo]

Ah ha yes - I love it. Claim the floorspace that the piano takes up.


Strictly speaking, any 'personal use' of things like mobile phones, work computers etc., does attract FBT unless the employee makes a contribution for it.

Thanks Prop and moyjos,

I'll check all of this out as well with the accountant. Claiming the floorspace may be a little much! I'll be happy just claiming the interest and depreciation.

Regards Jason.

 

[jingo]

It may be best to have your accountant get a ruling from the ATO on this.

Give a similar explanation of the need to have a grand piano at home as you have done here.

Thanks Macca,

Great advice, I'll check this out as well.

Regards Jason.

 

[shuggy]

For someone familiar with pianos do you think this cat is talented or is he an amateur?
http://www.youtube.com/watch?v=v0zgQAp7EYw