Don’t get caught up in the hype. Making big purchases for tax benefits may not benefit your business. There, we said it.
Spending money to make money is all well and good, however, spending money to get one back on the tax office could blow up in your face. Remember the ATO doesn’t give a refund of the purchase price, it lowers your taxable income – you make less profit and therefore pay less tax. Don’t forget the Instant Asset Write Off kicks in again on 1st July 2023.
To take advantage of temporary full expenses you need to read the fine print and understand the rules (or speak to someone who is licenced to explain the rules to you). You need to have the asset delivered and usable by 30th June. Ordering a new car now probably won’t make the cut as delivery delays of many many months mean you won’t have it registered and ready to drive by the end of June. The dealer offering to give you an invoice dated 30th June won’t do you any good (their commission might look spectacular!)
ATO says: Temporary full expensing supports businesses and encourages investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose.
All the fine print can be found here: https://www.ato.gov.au/Business/Depreciation-and-capital-expenses-and-allowances/Temporary-full-expensing/
Don’t forget the salesperson would love to meet sales targets and get paid a big fat commission, but they are not licenced to give you tax advice. Taking on lots of finance to shaft the ATO could cost you a lot more than you think!
