News & Tax Insights

If you have assets or investments in your self managed super fund and you move it into pension phase and then sell the assets, there is no  CGT or other income tax on the sale of the assets!

The cost of items of plant and equipment used in calculating depreciation is the full purchase price plus any costs of transporting, installing, relocating or re-erecting the item. If you cannot claim an input tax credit for GST that amount should be added as well.

If you are an eligible small business taxpayer you can claim immediate deductions for plant items costing up to $1,000.  Pooling arrangement are available for other plant. The depreciation rate for pooled plant is 30% or 15% for plant acquired during the year. This means you can claim a full 15% depreciation on plant purchased even on the last day of June. Other taxpayers can pool plant items costing up to $1,000 and claim depreciation at 37.5% for plant items acquired in the previous year or 18.75% for plant items acquired any time during the current year.

You can get a full deduction for items of plant costing $100 or less (including GST). If you have a large number of acquisitions you can use a sampling rule to calculate your deductions. To use the sampling rule. extract a representative sample (usually 10% of the total) or by choosing a sample comprising all eligible purchases for two months. Eliminate assets under lease, hire purchase, assets leased to others, assets specified ion a plant register, trading stock, spare parts and all items costing $100 or more. Review the sample to obtain a percentage of items costing less than $100…

Travel for attending conferences, buying, selling and general conduct of business can still be deductible even if part of the time is used for holiday or pleasure. The Tax Office will look at what was the main purpose of the trip in order to determine deductibility. If the business purpose was merely incidental to the private purpose, the expenses will be apportioned. Apportioning on the basis of time spent on each activity is inappropriate. You need to determine the degree of predominance attached to each purpose. If the predominant purpose is for business the cost will be fully deductible. Hence,…

If intending to sell a business, complete all necessary repairs to plant and equipment before the sale with a view to increasing the benefits for both the seller (by a higher price for the business) and the buyer (by a higher depreciable cost). A tax deduction for this expenditure is available for repairs carried out by the seller but not if carried out by the buyer.

There is a limit on depreciation claims for luxury cars. If you acquire a luxury car for business, tax deductible depreciation can be claimed on a maximum cost of $57,466. If you purchase a car for $95,000 you can only claim depreciation at the prescribed rate on $57,466 But you can claim interest on the full amount borrowed for the purchase. If you have borrowed the full $95,000 to purchase the car you can claim a deduction for the full interest paid.

If you purchase a computer system for use in your business, the software and contract services are often included in the total cost. If you can apportion these you can make the following claims: Computer Service Contracts: These can usually be claimed in full. If the prepayment portion is over $1,000 you may have to defer part of the claim until the following year. Eligible small business taxpayers can claim in full. Computer Hardware: This includes computers and peripheral equipment. These have an effective life of four years  hence the depreciation rate is 25% prime cost or 50% diminishing value.…

Software developed or acquired for your business is known as in-house software. You can claim depreciation based on an effective life of 4 years - this is a rate of 25% p.a. prime cost. If you cease using software and do not expect to use it in the future you can claim the written down value in full. Software for non-business taxpayers to earn income costing $300 or less is fully deductible.

Not enough cash to make a substantial contribution to your superannuation fund? Assets such as listed  shares may be transferred to your superannuation fund and a deduction claimed for their value. Make sure the transfer takes place before the year end in order to claimed a tax deduction and be aware that transfer might cause CGT for you. Concessional contributions for the 2015 Income year are capped at $30,000 or $35,000 if you were 50 years or over on July 1, 2014. If your contributions are too high you will get a heavy excess contributions tax bill. Also, if your…

You can claim a deduction for accident and sickness insurance premiums when the policy provides you with an income benefit during a period of disablement. This deduction is available to employees and self employed persons.

Double taxation of company dividends was eliminated through the dividend imputation system. This makes share ownership quite attractive. Companies pay tax on their profits at the rate of 30%. Dividends out of the after tax profit can carry with them franking credits up to the amount of tax paid by the company. As a receiving shareholder you can claim  a tax rebate to the extent of the franking credit. The dividend is grossed up by the amount for the credit. The result is that the grossed up amount is taxed at your marginal rate and a credit is allowed for…

Do you have income earning investments as well as a high salary of business income? Transfer your investments to your spouse or children over 18 who have lower income. Make sure they have full entitlement and control of these investments. The interest and dividends will be taxed in their hands at the lower marginal tax rates. You can achieve complete flexibility by using a family discretionary trust. You might have CGT on the transfer, so estimate the gain carefully before taking action.