POS SOFTWARE
One of the shocks in the budget was the government quite generous offer (proposal) to write off tax. The proposal itself was a surprised, and a double surprise that it is to be available now in this financial year.
Here is an explanation of how it will work, but let me first start off by saying I am not an accountant, and I do suggest you contact your accountant to discuss it first.
If say you were to buy a computer system for $8,195 inc GST. This is not a random number as its actually one of the quotes we issued today with someone who is jumping on the offer.
The first point it does not cost $8,195 as 10% of this is GST which they will be getting straight back so the proposed cost is $7,375.50.
Under the old system
- 15% of this would be allowed as depreciation, which works out to $1,106.33.
- As the company tax rate was 30%, which means the business would get back $331.90 in income tax credits.
- This means the business needs to fund the purchase which needs to be arranged in the first year $7,043.60.
Under the new scheme
- 100% of this would be allowed as depreciation, which works out here to $7,375.50.
- The company tax rate under this scheme will be 28.5%, which means the business will get back $2,102.02 in income tax credit.
- Which means that the business needs $1,770.12 less to fund the purchase which will be to it $5,273.48.
