Say I am close to the lower tax bracket limit after claiming my IP loss. Say after IP effects my new taxable income is 50,500 which puts my in the 42c tax bracket for tax re-calculation.
I have used 2002 - 2003 tax rates here.
i.e. $50,001 – $60,000
$11,380 plus 42c for each $1 over $50,000
thus my tax is $11,380 + ( $499 * .42 ) = $11,589
No say I spent $600 on painting the property or general wear and tare repairs of one sort or another, prior to tax time. This would mean my taxable income would be less $600 being $51500 - $600 = $49900 Thus now I have fallen into the lower tax bracket calculation of ;
$20,001 - $50,000
$2,380 plus 30c for each $1 over $20,000
thus my tax is $2380 + ( 29900*.30 ) = $11,350
Thus $12009 - $11350 = $239 difference in tax paid. I admit this is not much of a saving.! But in effect the tax saving has partly paid for the repainting or general repairs of $600. Also this $239 represents a $4.50 per week cash saving, by structuring the IP and costs with the tax system.
Hmm starting to look like no benefit at all actually when you consider that the expense of $600 would be deductible at the higher bracket also.
Oh well it was worth the mental exercise for me.
Anyway this is what I was getting at.
I have corrected the figures. I think :/
I have used 2002 - 2003 tax rates here.
i.e. $50,001 – $60,000
$11,380 plus 42c for each $1 over $50,000
thus my tax is $11,380 + ( $499 * .42 ) = $11,589
No say I spent $600 on painting the property or general wear and tare repairs of one sort or another, prior to tax time. This would mean my taxable income would be less $600 being $51500 - $600 = $49900 Thus now I have fallen into the lower tax bracket calculation of ;
$20,001 - $50,000
$2,380 plus 30c for each $1 over $20,000
thus my tax is $2380 + ( 29900*.30 ) = $11,350
Thus $12009 - $11350 = $239 difference in tax paid. I admit this is not much of a saving.! But in effect the tax saving has partly paid for the repainting or general repairs of $600. Also this $239 represents a $4.50 per week cash saving, by structuring the IP and costs with the tax system.
Hmm starting to look like no benefit at all actually when you consider that the expense of $600 would be deductible at the higher bracket also.
Oh well it was worth the mental exercise for me.
Anyway this is what I was getting at.
I have corrected the figures. I think :/
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