The tax writes off as it works for an SMB currently if it wanted to buy a point of sale system for $5,000.
Now it does not cost a business $5,000 as it can claim the GST. So 10% of this is GST which will be coming straight back, so the proposed cost is $4,545.45
- 100% of this would be allowed as depreciation
- If the company tax rate says 27.5%, which means the business will get back $1,250 in income tax credit.
Which means that the business needs to fund this purchase in the first year needs $3,295.45
Now the Labor proposal is to reduce the depreciation allowed to 20% if the asset is over $20,000 which this is not so
- As the government does allow depreciation of computers now at 25% so most people would use that.
- If the company tax rate says 27.5%, which means the business will get back $312.50 in income tax credit.
Which means that the business needs to fund this purchase in the first year needs $4232.95
** Which means that the business needs to fund this purchase in the first year requires an extra $937.50 **
As the current government did not make the investment allowance permanent despite many requests to do so and it appears that the Labor party has indicated that it will be replacing it with their own scheme. This may be your last chance to take advantage of this scheme.
If you want to take advantage of the instant asset write off, I suspect it is very dubious that you will get as good a deal as this later. So if you are looking to acquire or upgrade a point of sale system from us, NOW is the time.
