We should all know by now about the 50% rebate on capital expenses announced in the recent budget. But does that really mean Kevin and Wayne Swan will pay for half of your new laptop? Um, no.
If you buy a laptop for $3000 you will qualify for a tax deduction of $1500. Simple. But the tax deduction is off the corporate tax rate which is 30% so your actual saving is $450.
The other thing that has changed is the deadline is now 31 December this year to order and 31 December next year to take delivery and install. So buy soon if you want the rebate this financial year.
These rules apply for businesses with a turnover less than $2m and you should see an advisor for details about how this affects you.
Then when you decide to buy a new machine and get Kev and Wayne to sponsor you, give us a call!
Buymax ph 02 8197 0333
It’s true that they don’t pay half, but remember that the equipment can still be depreciated in the normal way, meaning that for a $3,000 computer, which is depreciated over three years, you should still be able to claim the $1000 depreciation allowance for the first year as well – meaning an additional $300 reduction in tax. Plus, of course, those deductions can be important for sole traders in taking their taxable income below the threshhold for things like the Medicare surcharge, meaning that for some people, the value of the bonus can approach the raw value of the asset itself.
From the ATO’s site “The tax break deduction is in addition to deductions for the decline in value you are entitled to claim for the asset. The tax break will not be taken into account in working out the amount of any balancing adjustment amounts, capital gains or capital losses when you stop holding the asset.”
http://www.ato.gov.au/businesses/content.asp?doc=/content/00193790.htm&page=5&H5