All posts by swl-impacc

mobile phone internet tax reduction

Handy tips on how to claim a mobile phone tax deduction and claim on internet and home phone expenses

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Mobile Phone Tax Deduction & More

If you use your own phone(s) or internet for work purposes, you may be able to claim a deduction if you paid for these costs and have records to support your claims.

Follow the link below to the ATO website for more information and tips on how best to keep your records up to date.

https://www.ato.gov.au/Individuals/Income-anddeductions/Deductions-you-can-claim/Otherdeductions/Claiming-mobile-phone,-internet-andhome-phone-expenses/

CHINA’S ECONOMY

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Opportunities, Investment and Appetite

There has been a lot of discussion about China’s economy lately – Free Trade Agreements, financial stability and growth and the impact on the Australian economy, and Chinese investment in Australia. With the help of our international contacts, we explore the impact of China on Australia and give some context to the debate.

According to Austrade, one in every three Australian export dollars earned is from sales of goods and services to China. On top of that, 80 per cent of the value of Australia’s export growth in 2013-14 was from trade with China. It’s not surprising then that we have a fixation with the welfare and continued consumption of Australian goods and services by China and China’s rising influence on the Australian economy.

Chinese growth – an insider’s view

China’s economic growth has been spectacular: until recently growing at around 10 per cent per annum from a low economic base to arguably the leading global economy. While construction and infrastructure projects were the primary drivers of growth, the opening of China’s economy to foreign investment in the late 1970s saw it become the ‘factory of the world.’

The fuel to drive this growth was a massive growth in Chinese consumption of resources – steel, iron ore, copper – you name it China needed it. You can see this consumption growth reflected in Australia’s export statistics.

With an increase in wealth came an increase in consumerism with a growing middle class. And, with a growing middle class came a property boom. China’s economy enabled many Chinese to afford better housing.

Demand for housing escalated and development after development was launched, many snapped up within hours of launching.

The cost of this success was a rapid increase in the cost of living, high property prices fuelled by speculators, and corruption.

With the global financial crisis, demand for China’s goods started to decline creating excess capacity, factory and company closures, and staff lay-offs.  Banks were then asked to reduce their loan exposure and Government projects scaled back. Starved of funds some companies sought funding from underground banks – shadow funding – paying extreme rates of interest that further aggravated the slow down and excess capacity.

Looking forward

The People’s Bank of China recently reported that it expects economic growth to be 6 – 7 per cent over the next three to five years – although businesses on the ground will tell you it’s lower than this at about 5.8 per cent.  Interest rates were cut for the sixth time in 12 months in late October to try and hit growth targets.

To maintain growth, the Government is embarking on transformation programs focused on austerity and knowledge technology and transfer.

We can see some of the fruits of this commitment to knowledge transfer with China now our largest export market for services representing 13 per cent of our global services exports.

On top of this investment program, China has eased restrictions on foreign owned investment firms, no longer requiring them to partner with local managers.

In terms of outbound investment, China’s State Council recently bolstered its offshore investment program – the Qualified Domestic Individual Investor program. Currently limited to a pilot program with the Shanghai Free Trade Zone, the program allows for an expanded range of offshore investments in greenfield and joint venture projects, real estate, and shares, bonds, insurance products, etc.  You can expect to see the effects of this in Australian development projects.

Free Trade with China

The Free Trade Agreement with China is set to pass Parliament with the Labor Party negotiating a series of reforms to protect workers rights. The amendments put in place minimum wage safeguards for temporary skilled migration, new 457 visa conditions linked to relevant trade licenses, and the capacity to impose a ceiling on the number of new work agreements for 457 visa workers.

Australian expansion into Asia is increasing for businesses of all sizes. In a recent survey, the ANZ recently reported that the majority of Australian businesses that have expanded into Asia have experienced a substantial lift in profits, with almost 40 per cent of small businesses making a return on investment within 12 months.  If your business is not already looking at its international potential, is it time to review the opportunities?

For the very best advice on Accounting, Business Services, Tax, Financial Planning, Finance Broking and Insurance, contact the team at Impacting Accounting today.

Business Structures and Restructuring

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Is your business structure working against you?

Many business owners don’t realise that their current business structure is inadequate, until something comes up – and this something is usually something negative.

Are your assets at risk?

Legal action by employees, customers and suppliers as well as divorce are the two primary risk issues for many business operators. If you have been operating as a sole trader or as a partner in a partnership or have simply been holding all business assets in a single entity, your structure may not provide sufficient asset protection. If any personal assets or valuable assets of the business are held in the same entity which carries on the trading operations of the business, those assets may be at risk. To protect your assets it is generally preferable to separate as many valuable assets as possible from the trading operations.

Can you introduce new business partners or investors?

If you want to provide key employees or investors with an equity interest in your business, your current business structure may not allow for this. For example, it is not generally possible to provide fixed entitlements to the profits of a business operated by a discretionary trust.

Entities such as companies and unit trusts are a much more effective vehicle to facilitate the introduction of new equity partners as they can provide a fixed interest in the income and capital gains generated by the business. New investors can also potentially claim interest deductions on funds borrowed to invest in the company or unit trust.

Reinvesting in growth

Reinvesting profits in your business is important if you have or expect a strong growth path.  Some business structures however don’t readily facilitate profits being retained by the business. For example, it is generally more difficult for a trust to retain profits, as the trustee of a trust is taxed on these profits at penalty tax rates if they are not distributed to the beneficiaries of the trust each year.   This is compared to private companies where profits are taxed at a maximum rate of 30% or 28.5% and can be retained in the company without the need to distribute these profits annually.

Can you take money out of the business?

When you first established your business, it’s hard to know what your profits are going to be and for many, there are a few lean years of losses to get things up and running.   Your personal circumstances might have changed as well – marriage, children, a spouse, etc. These changes can drive the need for change. Your company’s business structure has a direct impact on how money flows through it to the investors.  For example, one of the benefits of a discretionary trust is that the income of the trust can be distributed to any of the beneficiaries of the trust in any proportion, and that proportion can change annually.

Impeding international expansion

If you are contemplating expanding overseas this can significantly increase the complexity of your operations. All of a sudden you will be exposed to a new set of Australian tax rules in addition to the legal and regulatory requirements that will need to be considered in the foreign jurisdiction. On top of the complexity, control may also become an issue. The right business structure can limit your exposure to risk.

Access to tax incentives and concessions

Research & Development (R&D) concessions are only available to companies. If you have a significant level of R&D activity that could potentially qualify for the tax incentives, it’s worth exploring your options if you are not already in a company structure.

Can you exit your business?

The business lifecycle has shortened considerably with less business owners seeking to create empires but more opportunistic business models.  The wrong structure will limit your ability to sell your business interests and may have a dramatic and detrimental impact on the amount of tax you pay on the sale proceeds.  It’s important that you explore this issue well before you actually plan to sell or reduce your stake in the business.

For all matters concerning business structures and restructuring, speak to the team at Impact Accounting today.

Bad Deeds: Is your SMSF at risk?

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SMSF Trust Deed

Your SMSF’s trust deed is its rule book.  If the deed does not allow or recognise something then the trustees can’t do it. Despite this, a lot of trustees are unaware of what their trust deed says – it was just something that was required when the fund was established. The problem with any document is that unless you amend it, it is only current for the circumstances that existed at that time. However, the law changes regularly and so do individual circumstances.

This month, we shortcut the review process and highlight the key SMSF trust deed problem areas.

Trust deed does not allow the types of payments being made

A common audit issue is SMSF’s paying pensions and other payments to members that are not allowed by the trust deed.  The assumption is that because the superannuation laws allow that type of payment then it must be ok.

But, if your deed does not allow the types of payments your fund is making then you’re breaching your deed.  Check the deed detail well before you anticipate the fund needing to make payments. This is particularly important for deeds created before 1 July 2007 when the superannuation laws on pension payments changed significantly.

Trust deed does not recognise life changes and estate planning needs

There are several aspects of a SMSF trust deed that have a direct impact if you die or your circumstances change:

  • Does your deed allow you to nominate who will receive your super if you die? Some deeds don’t allow for binding death nominations. In some cases the remaining trustees decide who gets your super.
  • If you have death nominations in place, is the wording consistent with the requirements of the trust deed.
  • Who has the power to add or remove trustees? There are a lot of court cases around this with kids excluded from a parent’s super by a new spouse or vice versa.
  • When does someone become or stop being a member? Some deeds will automatically remove members with a nil balance.

Flexibility and control

Does your deed allow the use of reserves or other strategies that your accountant may recommend at year end to minimise tax?  Some deeds don’t allow for effective tax planning strategies!

For all matters concerning SMSF trust deeds, contact the team at Impact Accounting today.

Capital Gains & Property:

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Capital Gains Tax – What You Need To Know

capital gains tax cgt

The Top Questions and Answers

The thought of the Australian Tax Office (ATO) sharing up to 50% of any gain you make on an investment decision is enough to strike fear into the hearts of most people. Given Australia’s love affair with property, it is little wonder that we are often asked about the impact of capital gains tax (CGT) on property.  This month, we explore the most frequently asked questions.

In general, CGT applies to any change of ownership of a CGT asset, unless the asset was acquired before 20 September 1985 when the CGT rules first came into effect.

Most questions about CGT on property are based on the main residence exemption that exempts your home (your main residence) from any CGT exposure when you sell the property.

I jointly own an investment rental property with my elderly mother.  Neither of us has ever lived in the property.  We’ve recently updated our wills. The lawyer says that if Mum’s will gifts her half of the property to me then this ‘gift’ will not attract capital gains tax.  Is this correct?

Kind of.  Tax law tends to work on the basis that if looks like a duck and walks like a duck then it’s a duck, not whatever your legal document calls it. Exposure to capital gains tax is a matter of fact and substance.

If you inherit your mother’s share of the property, there would generally be no tax liability until you sell the property. What is important here is how the CGT is calculated when you ultimately sell.

When the rental property transfers to you from your mother’s estate, the tax rules determine how CGT is calculated when you eventually sell. Basically, if the property was bought on or after 20 September 1985 then when you sell the property your taxable profit will be based on the original purchase price.  That is, you will end up being taxed on the increase in value of the property since it was acquired, including the portion that accrued while your mother was still alive.

In general, if you jointly own an investment property, your individual exposure to CGT will depend on how the property is owned. If the property is held as tenants in common then any CGT exposure is in line with your ownership interest.  For example, in your case, it is 50% owned by your mother and 50% by you but different people can own different ownership interests. If the property is owned as joint tenants then any CGT exposure is equally shared by the owners.

I bought a house in 2000, and lived in it until 2003. I was posted overseas with my job between 2003 and 2011. During that time my brother lived in the house rent free – he just paid for utilities.  In 2011 to 2012, I rented the house out (no one I knew). I moved back into the property in 2012 and have just sold the house. Do I have to pay capital gains tax on the property?

The capital gains tax rules are more understanding about how people live their lives than other laws and in some circumstances allow you to continue to treat your home as your main residence even if you are not actually living in it.

While you are away overseas, if you leave the property vacant or let a friend or relative live in the property rent-free, assuming you do not claim any other property as your main residence, then you can continue to treat the property as your main residence for CGT purposes indefinitely.

If you rent the property out while you are away, the tax laws allow you to still claim the property as your main residence as long as the period you rent it for is not more than a total of 6 years. This 6 year period can actually be reset by moving back into the property again.

Effectively, you can move out and move back in as many times as you like and still claim the property as your main residence as long as it is your only main residence during that time and if you are renting it out, you do not rent it out for more than a total of 6 years across the period you are claiming the property as your main residence.

During the rental period you can also claim deductions against the rent, even though the property might still be exempt from CGT during this period.

I bought a property in 2008 and expected to move in straight away, but there were tenants still in the property and their lease still had 8 months to go. I waited for the lease to expire and then moved in. I have lived there ever since and plan to sell later this year. Can you just confirm that I would still qualify for a full CGT exemption on the sale as the property has significantly increased in value?

This is a very common situation but is probably overlooked much of the time. Unfortunately, you would not qualify for a full exemption in this case.

The main residence rules allow you to treat a property as if it has been your main residence since settlement date as long as you actually move into the property as soon as practicable after settlement. This is intended to cover situations where there is some delay in moving into the property due to illness or some other “reasonable cause”. The ATO’s view is that this rule cannot apply if you are waiting for existing tenants to vacate the property.

This means that you would only qualify for a partial exemption under the main residence rules. We will need to calculate your gross capital gain and then apportion it to reflect the period of time when it was actually your main residence (i.e., from when you actually moved in).

As long as you are a resident of Australia and have owned the property for more than 12 months we can also apply the 50% CGT discount to reduce the leftover capital gain.

It will be important in this case to gather as much evidence as possible of non-deductible costs that you have paid in relation to the property such as stamp duty, legal fees, commission paid to real estate agents, interest, rates, insurance, etc. This will help to reduce the gross capital gain that is subject to tax.

For all matters concerning the capital gains tax for your investments, speak to the team at Impact Accounting today.

Treasurer Raises ‘Idea’ of Personal Tax Cuts

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Personal Tax Rates & Tax Cuts

Who doesn’t like a tax cut when they personally benefit from it? In a recent speech, the Treasurer said that personal tax cuts were required to prevent ‘bracket creep’ – that’s jargon for what happens when the tax rate thresholds don’t keep pace with inflation and more people are pushed into a higher tax bracket (they get taxed more and potentially lose access to benefits but are economically standing still).

The last change to the tax brackets was in 2012 to increase the tax-free threshold. The Government estimates that in the next two years, 300,000 Australians will move into the second highest tax bracket.  And, by 2025, 43% of taxpayers will be in the top two tax brackets. The political problem is that because personal tax rates are a percentage, any cut to personal tax rates benefits higher income earners – they earn more therefore the dollar value of the cut is more.  As it stands, the top 10% of income earners pay almost half of all personal tax collected – in the 1990s it was closer to 25%.

The Treasurer also points out that in many cases, women returning to work after being on maternity leave are often worse off or no better off once you factor in the cost of childcare. It’s a big issue for many families and prevents women contributing in the workforce.

So, the Treasurer has identified problems that most people would be aware of from personal experience, but what about solutions? That it seems is for another time. The Options Paper on tax reform is due out before the next election.

For professional advice concerning your personal tax rates and tax cuts you may be eligible for, speak to the team at Impact Accounting today.

Should your SMSF buy property in the United States?

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SMSF Property

One of the most common questions from clients with a Self Managed Superannuation Fund (SMSF) is, can I buy property with my SMSF?  Followed by the second question, can I buy property in the United States?

SMSF’s provide investment flexibility for those that understand the rules. They can also be a significant liability if you get it wrong.  There are a few key things to check before purchasing a property:

The SMSF’s investment strategy and trust deed must allow for the purchase you are contemplating.  You can’t purchase property from a related party (for example a relative or spouse) unless the property qualifies as business property (business real property to use the technical term).

When you are exploring the viability of the property purchase, be aware that the SMSF cannot lease the property to a related party (again, unless it is business real property).  For example, you can’t have your kids living in the property even if they pay market rate rent.

Your SMSF needs to have the cash flow and liquidity to purchase the property.

Factor in transaction costs such as stamp duty into your financial planning.

Australian SMSF’s can buy property in the US if it is correctly structured (you will need good legal and structuring advice). The question is, should you invest your retirement savings in a market where you have limited visibility or knowledge?

A SMSF would not usually acquire US property directly.  Generally, the fund would structure the property investment through a Limited Liability Company (LLC) where the SMSF (and its associates) own and control the majority of the “membership” (the shares). The US LLC is likely to be required to lodge a tax return and pay US federal and state taxes.

As the actual investment the fund holds is the interest in the company (with the company owning the property), there are inhouse asset issues to consider. One issue is that the company bank account needs to be with an entity that is classified as an Authorised Deposit Institution (ADI) – not all foreign banks are.  Fail this criteria and the investment held by the SMSF may become an in-house asset and require the fund to sell the asset.

If you are contemplating buying property in your SMSF, talk to us today about achieving the right structure and outcome.

WHAT NOW FOR THE GST?

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Netflix Tax & More

Fifteen years after the introduction of the GST in Australia debate still rages over what should be taxed and whether the GST rate should increase.

Unless the Government changes the GST Act, any change requires the approval of the States and Territories. The Treasurers’ workshop late last month resolved to keep the GST rate at 10% but enable a series of other changes.  We look at the key areas of change:

GST on online products

From 1 July 2017, the GST will be broadened to apply to all goods purchased online and imported from overseas.  Currently, GST does not apply to inbound goods under $1,000.

The latest NAB Online Retail Sales Index estimates that Australians spent $17.3 billion on online retail in the 12 months to June 2015 – around 7% of traditional bricks & mortar retail. It’s difficult to find an accurate measure of how much of this online trade goes to overseas retailers but the Productivity Commission report in 2011 estimated 7.5% – the rest is spent with Australian retailers. According to the same report, around 76.5% of all online sales are for goods made up of low value purchases under $100.

The Treasurers have opted for a vendor registration model which means that they are relying on businesses based overseas and selling into Australia to register and comply voluntarily with Australian tax law. The problem is how to collect the tax from businesses that have no obligation to comply and the Government has no jurisdiction to pursue tax owing. It is almost impossible to bring all but the largest of providers into the GST net.

An OECD report at the beginning of the year recommended that foreign suppliers register in the country they are supplying to – Apple for example, already does this in Australia.  It will be interesting to see if, over time, this becomes the norm. While protecting the tax base it would be a major competitive disadvantage for small business looking to explore new markets.

The ‘Netflix tax’: GST on digital goods

Colloquially referred to as the ‘Neflix tax’, draft legislation released on Budget night broadens the GST to digital products and other imported services supplied to Australian consumers by foreign entities in a similar way to equivalent supplies made by Australian businesses.

Expected to generate $350m over 4 years, the tax treats streaming or downloading of movies, music, apps, games, e-books as well as other services such as consultancy and professional services in a similar way to local suppliers. In some cases the GST liability might shift from the supplier to the operator of an electronic distribution service where those operators have responsibility for billing, delivery and terms and conditions.

GST on digital products is intended to apply from 1 July 2017.

GST to remain on tampons

GST on feminine hygiene products generates around $50 million in revenue per year.  It has been a political sore point for some time that highlights the inequities of a system that taxes essentials but not items such as personal lubricants. Toilet paper and nappies, other essentials of life, are also taxed.

At the Treasurers’ workshop, the State and Territory Treasurers rejected Joe Hockey’s proposal to remove the GST from feminine hygiene products.

When the GST was first introduced, to get the legislation through Parliament the Howard Government agreed to demands to make amongst other things food, health and medical supplies, and education GST-free.  The rationale is that because the GST applies evenly across all things, it hits low-income earners the hardest as they spend a higher proportion of their income on basic necessities.

On these grounds making feminine hygiene products, nappies and a range of other essentials GST-free sounds rational. The problem is that the wealthy benefit from GST-free products and the tax system becomes a quasi social welfare system that dramatically impacts on the revenue collected and revenue available to fund better targeted social welfare programs. It’s a touchy debate and one that the major parties are unlikely to want to enter anytime soon.

It’s Not Easy Being a Foreigner

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Foreign Investment in Australia

If you are not an Australian resident for tax purposes, you are excluded from many of the tax breaks available to residents and an increasing target of the Australian Taxation Office.  We explore the widening gap between residents and non-residents.

Scrutiny of Australian investments

With residential property prices soaring, foreign investment in Australia and ownership is in the spotlight.

However, foreign residents and temporary visa holders cannot buy established residential property – they can only invest in property where that investment adds to the housing stock (including) vacant land for development.

And, only foreign companies with a sizeable interest in Australia can buy residential real estate for Australian based staff. Temporary residents can buy one established property to live in (with approval) which they have to sell when they are no longer living in the property.

Investment in agricultural land

Foreign ownership of agricultural land has come under scrutiny lately resulting in a number of changes.  From 1 July 2015, all new foreign interests in agricultural land must be registered with the Australian Tax Office (ATO) and all existing interests registered by 31 December 2015.

In addition, the threshold at which foreign investors must get approval for a foreign investment in Australian agricultural land, dramatically reduced from $252 million to $15 million in March this year.

Tax rates and tax benefits

Tax rates

Unlike Australian resident taxpayers, non-resident taxpayers pay tax on every dollar of taxable income earned in Australia starting at 32.5%. There is no tax-free threshold.

Tax on investments

The 50% general discount on capital gains tax that applies to Australian residents is no longer available to non-residents; meaning that non-residents pay the full amount of CGT on any gains made. Impending new laws also seek to apply a 10% withholding tax on the sale of real property by foreign residents where the property is valued at $2.5 million or more.

Superannuation

SMSFs have strict residency rules and must meet three separate tests to continue to be a complying fund and access the tax concessions that come with complying status:

The fund must be established in Australia or have an asset located in Australia; The management and control of the fund must ordinarily be in Australia  –  generally this means that trusteeship should be in Australia; and

Contributions to the SMSF should only be made by members residing in Australia. If overseas members want to contribute to the fund then at least half the fund’s assets need to be held by members who reside in Australia and also make contributions.

This is not an exhaustive list and residency can be a very complex issue. If you are concerned about your residency status, please give us a call.

For all matters concerning Foreign Investment in Australia, talk to the team at Impact Accounting today.

Top Small Business $20k Deduction Q&As

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$20000 small business tax break

In a recent speech, Small Business Minister Bruce Bilson stated that a lot of his time spent talking about the $20000 small business tax break had been spent convincing people it was not a hand out.

“I have spent a lot of my time explaining that asset write-off mechanisms aren’t grants, they are not gifts, they are not cash backs. They are a way of expensing a purchase in an asset that can contribute to a functioning business.  Now, if you are not making any income there is not a huge benefit in you being able to write-off additional expenses at a faster rate.”

Here are some of the common questions we are asked to help clear confusion.

If I spend $20,000 how much will I get back?

The instant asset write off is a tax deduction that reduces the amount of tax your business has to pay.  It enables small business entities (businesses with annual aggregated turnover below $2 million) to claim a deduction for depreciating assets of less than $20,000 in the year the asset was purchased and used (or installed ready to use).

For example, if your business is in a company structure the most you will ‘get back’ (reduce your tax by) is 30% (in 2014-15) or 28.5% (in 2015-16) of the cost of the asset. If the business made a $19,000 purchase in June 2015, the most the business would reduce its tax bill by is $5,400.

It’s a much better deal than the previous $1,000 immediate deduction limit but there are still cash flow issues for the business that need to be considered. Remember also that the business would have been able to deduct the purchase anyway, just over a longer period of time.

If I signed a contract before Budget night but didn’t pay for the asset or receive it until after the Budget, can I still claim the deduction?

To be able to claim the immediate deduction, you had to “acquire” the asset on or after 7.30 pm AEST on Budget night (12 May 2015) and use it (or install it ready for use) before 30 June 2017.

Contracts are often tricky because the date you acquired the asset really depends on what the contract says and how it’s structured. Generally, if you signed the contract before Budget night and the contract made you the owner of the asset, then the asset would not qualify for the $20k immediate deduction.

We’ve invested in new equipment for just under $18,000. How soon can we claim the immediate deduction?

‘Immediate deduction’ is a bit of a misnomer. Immediate in this context means that your business can claim a tax deduction for the asset in the same income year that the asset was purchased and used (or installed ready for use).  The deduction is claimed on the business’s tax return.

Requiring the asset to be used or installed ready to use is an interesting catch. It means that businesses cannot stockpile assets and claim the immediate deduction for those assets. For example, if a restaurant business bought three ovens in June 2015, those ovens would need to be in use or installed ready to be used before the tax deduction could be claimed.

If only one oven was used or installed before the end of the financial year, then the business could only claim the immediate deduction for one oven in their tax return.  Assuming the other ovens are used before 30 July 2017, the immediate deduction could be claimed in the year they were first used or installed ready for use on the business’s tax return.

Can I buy multiple items and claim the immediate deduction even though the total being claimed is more than $20,000?

Yes. As long as you acquired the asset on or after 7.30 pm AEST on Budget night (12 May 2015) and use it (or install it ready for use) before 30 June 2017, then an immediate deduction should be available if each individual item costs less than $20,000.

Don’t forget about the cash flow implications. Depending on when you purchase the assets it might be another year before you can claim the deduction.

What sorts of assets can I claim an immediate deduction for?

To be able to claim the $20000 small business tax break, the asset needs to be a depreciating asset.  A depreciating asset is an asset whose value you expect to decline over time.  Examples include computers, furniture, and motor vehicles.  So, no investment assets.

We’ve had some very interesting questions from people wanting to know what they can and can’t claim the immediate deduction for. Take artwork being advertised by a local art gallery. The gallery tells you that your business can buy anything up to $20,000 and claim an immediate deduction for it.  Is this correct? The answer is, it depends.

There has to be a connection between the artwork and your business for it to be a depreciating asset.  For example, the artwork could be displayed in your office reception or waiting area.

The Tax Office says that the life of an artwork for tax purposes is 100 years. So, deducting the artwork immediately is a big tax bonus.

The same principle applies to items that relate to an existing asset, like machinery. If what you are purchasing qualifies as a depreciating asset in it’s own right, then you can claim it.

Whatever the asset is, the same principles apply. Your business needs to qualify as a small business entity, the asset needs to be purchased and used (or installed) after Budget night and before 30 June 2017, the asset must cost less than $20,000, and the asset must be a depreciating asset. Not everything will qualify.

For information concerning the $20000 small business tax break, speak to the friendly team at Impact Accounting today.