Accelerated Asset Depreciation – 100% deduction NOW if it’s under 20 k.
How does this strategy work?
You buy an asset.
A car for example.
For running around doing quotes onsite.
Its value will GO DOWN (aka depreciate) over time.
So the tax man lets you claim that depreciating value – Thanks, Tax Man!
The key to THIS strategy is the magic number of $20,000.
If the asset is $20,000 and under you get 100% tax deduction NOW.
Option 1 (Without Tax Planning): Buy a company car for $20,001.
You can claim depreciation … bit by bit over the next 8 years. Sad Face.
(If you want the detail, here’s how much depreciation you could claim in the first year: Only up to a maximum of $5,000 in the first year, but this amount gets lower the further into the financial year that you buy it. If you buy the car on 30 June, you would only get a $13 tax deduction!! boring…)
Option 2 (With Tax Planning): Buy a company car for $20,000.
You get a 100% Tax Deduction this year. Woohoo!
By purchasing an asset $20,000 and under, you’d save $9,400 tax, when compared to paying 47% tax in your own name.
So if you were already shopping for a new asset for the business, remember the magic number – $20,000.
- The Coffee Machine for the Cafe
- The Squat Rack for the Gym
- The Drill for the Sparky
- The Abacus for the Accountant (lol)
- The Scanner for the Doctor
- The Microphone and Laptop for the Podcaster
- The Deep Fryer for the Cook
- The Pole for the Dancer
- The Table for the Physio
- The Camera lense for the Photographer
What do you need to implement this strategy?
- A Business that turns over under two million dollars ($2,000,000)
- An invoice for an asset under $20,000 or under $22,000 if you are GST registered and the expense has GST on it.
- A chat with an Inspire Chartered Accountant – www.calendly.com/inspireca.
- To take action prior to 30 June.
FAQ’s: Accelerated Asset Depreciation.
Why have I never heard about this strategy?
This strategy has been around since May 2015.
Your accountant should have made you aware if they’re a good adviser for your business.
This is the limit that the ATO advised in the May 2015 budget.
What if I turn over more than $2,000,000 can I still use the strategy?
No, sorry. The strategy is only available for what the ATO calls ‘Small Businesses’ – those who turn over less than $2,000,000.
NEXT STEPS: You can book in a Quick 10 Min Chat here with an Inspire Chartered Accountant to talk about Tax Saving Strategies that will work for you.