As the financial year draws to a close, clients often ask us what is the easiest way to save on tax.
Thanks to the federal government's recent law change, you can save even more on asset purchases this year.
You can now write off assets purchased after April 2nd 2019, up to $33,000 including GST until the end of the financial year.
This threshold was previously only $22,000 including GST.
What this means is, say your purchase a new excavator for exactly $33,000 inc GST your earth moving business. Prior to the rule change, you would have to depreciate the excavator over its useful life for 10 years, which would give you a first year deduction of $6,000 and a typical tax saving of $1,650.
Now you can claim the entire purchase value as a deduction (minus the GST of course) and reduce your business profit by the full $30,000, which in a typical company, would save you $8,250* in tax right now!
The asset does not need to be purchased up front either, with financed assets also available as a instant write off.
So if you have some spare funds laying around and would rather see your hard earned money be reinvested into your business rather than the tax man, it might be a good idea to start browsing the net for next business upgrade.
*Tax Savings are based upon company tax rates of 27.5%. Should your business operate in a sole trader, partnership, or in a trust, tax rates will vary. Contact us today to have us provide you a more accurate tax saving on any potential asset purchase
A shiny new asset has never been more appealing!