20k End of tax year deduction for business

Hey guys,

I've heard so many different opinions on this, I have also read a lot of articles about this aswell.

I am struggling to come to a concrete answer.

If anyone can shed any light on this, would be great.

Regarding the 20K instant asset write-off for small business for this financial year.

I understand if I am to purchase anything business related under a combined total of 20K or a single total of 20K. Eg if I was to buy a car and place it under the business name (note this is an ABN business not ACN LLC etc)
For example a $19,900 purchased car.

I was under the understanding that if that car was purchased at a dealer, the GST is immediately deducted of your bas as normal. Then the total remaining amount of the purchase is deducted off your EOFY tax bill or any outstanding tax bills for that said business.
If it is privately purchased vehicle the GST component is not claimable as it doesn't exist, however 100% of the purchase price is again immediately deducted of that financial years debts ($19,900) Eg tax debt for that financial year for example is 25K - $19900 asset writeoff = $5100 tax debt is now owed. Am I wrong?

If im wrong how would the deduction effect my end of year tax bill etc?​

much appreciated.
Donny.

 

Yes the small business write off reduces net profit.

In your example you have deduct the amount from the tax payable. That isnt correct.

You mentioned you were looking for a new accountant. These sorts of things could be covered in the PC free consults @Paul@PFI does.

 

Unfortunately Paul is around 1.5hrs from my homebase, I need to be close to my accountant. Skype and emailing docs wont work for my situation.

If I am incorrect. Can someone please clarify what is correct?

 

Expenses are deducted from income not tax.

 

I live in Sydney, my accountant is in Nowra. I haven't laid eyes on him in over 10 years.

 

There are several reasons why the GST inst fully creditable.
Logbook ? Maximum amount based on car limit ?

Failure to have a logbook % may impact both the deductible and the GST. Its one for tax advice. Get it wrong and the $20k wont be deductible.

Also - Is this a eligible small business. Is that same entity buying the car ? I have seen a taxpayer buy a car and its not owned by the small business entity. No write off.

And the small business write off MAY increase deductions. It brings forward depreciation and isnt a bonus. (2o19 would be Nil depreciation). Definately doesnt come off a tax amount and if there is no profit the issue just makes a loss larger.

 

If a company owns a single property, and has small turnover, is it a ‘small business’ and hence entitled to 20k writeoff?

 

Just owning rental property won't amount to being a business. It would have to be a more substantial operation - perhaps something to aim for.

 

No. Separate activities. Anyone with a Ip in same company as business needs to rethink strategy. Asset protection fail

 

Paul, is it fair to say there is strengths and weaknesses in different structures? Combining allows you to claim this $20k immediate write which has some value. I am sure there are other issues to consider.

 

I dont believe structure plays any part in entitlement to the small business concessions. A small business can be held in more than one entity (ie Intellectual property ownership, manufacturing, distribution etc) or can be grouped.

Every structure has strengths and weaknesses.