Business

What you need to know about $20k asset write-off

OPINION: There appear to be some misconceptions surrounding the $20,000 instant asset write-off concession announced in the May Budget.

Many have appeared in various newspaper articles written by journos who haven't checked facts, some by television talking heads, others by pollies even from the Coalition ranks.

As you would know the concession applies from 7.30 pm on May 12, 2015 to June 30, 2016 and it is not cumulative, it applies to each and every purchase.

Treasurer Joe Hockey warned people not to race out and get themselves an ABN just so they can get a deduction because a small business must make money to be bona fide.

That's simply untrue.

The implicit underlying intention in setting up a business is that it will generate assessable income.

However, it is not written that a business must make an income at any particular juncture in its existence.

You, I and the gatekeeper have an unalienable right to signal an intention to establish a business in this country, something that is done by the acquisition of an ABN.

The only exceptions that come readily to mind are jailed crims and bankrupts.

>> Emotion best kept out of business planning

The business may be in the guise of a sole trader, partnership, trust or company and there is no compunction on the business so registered to immediately generate assessable income.

And it may immediately begin to deduct expenses. Including the instant asset write-off.

And now since the Budget, the cost of professional advice in the process of setting it up.

But what's the point if you are an employee?

And it will be employees looking for a tax break who are likely to be the first cabs off the rank among Hockey's named and shamed.

If you did set up such a business as a sole trader or partner, you'd get absolutely no tax benefit whatsoever from the ploy.

Let's say you spent $19,999 on a second-hand vehicle intended for business use, had employed a lawyer or accountant who'd charged you $1000 to get you started and made absolutely no sales between now and June 30.

Yes, you'd be able to claim the $20,999 in expenses, no worries.

But what will happen is that you will be reporting a commercial loss of $20,999 to the ATO; a loss you cannot apply to your salary and wage income!

That the loss is carried over into the 2016 tax year and onwards until you engage in a truly commercial activity at which point it is offset against profits.

There are four definitions of what constitutes a truly commercial activity but the simplest is that the business must generate an assessable income of $20,000 or more.

Once that happens, the owner may apply any losses against their salary and wage income.

If you have read this carefully and are one of the many coming off the island with the intention of setting up as a tradie, you'll realise that you can legitimately go about getting together the equipment you'll need as it becomes available. While you're still employed!

As for getting your business structure right, there's no real panic: you've got the so-called Doctors' Cases (1978) on your side which will allow you to transfer your business assets and trading losses.

Bob Lamont and Corporate Accountants have moved to Goondoon Street, Gladstone. Bob may be contacted at boblamont 1947@gmail.com.

Topics:  bob lamont federalbudget2015-16 gladstone business opinion



Date nights under $50

ACCORDING to The Bachelor falling in love involves helicopter rides, private jets, shopping trips, and we mustn’t forget the hot tubs.

Brisbane's arts and culture events centre stage

You loved the film, now you're about to love the musical. Don't miss The Bodyguard The Musical in Brisbane this July.

THE arts and culture events you don't want to miss.

Homewares stores to fulfil your Instagram dreams

No Caption

You too can become an Insta-star with these fab stores.

Top 10 Brisbane experiences to cross off your bucket list

Do yourself a favour and get amongst the food truck scene. Eat Street is a great place to start.

A GOOD bucket list doesn’t have to span continents or cost millions.

Six mega sporting events you need to be at this year

Don't miss all the action trackside this season.

IF THERE is one thing Brisbane does damn well, it’s play host.

Insider’s guide to the best rooftop bars

Eleven Rooftop Bar is one to put on your hit list.

SEE the world from a different perspective...

Where to get your hands on the best wings

Try out these bad boys at Buffalo Bar.

IS THERE anything better than a wicked bowl of chicken wings? Nope.

Another GPC worker busted over false claims

The Gladstone Ports Corporation.

GPC continue to put rorting workers through court.

Notorious 'pirate' vessel on its way to Gladstone

LIVING HISTORY: Graeme Wylie on board his replica 15th century caravel Notorious. Below: The ship's iconic silhouette.

Graeme and Felicite Wylie are living the dream.

Local Partners

Better phone service for Gladstone's regional towns

Telstra: "This technology is delivering big benefits to these rural and regional communities”


Win a $1000

GROCERY GIFT CARD!
Learn More

What to expect at Birds of Tokyo's Ipswich gig

The band will perform at the Racehorse Hotel on Friday.

BAND member Glen Sarangapany talks music, pub grub and doing shoeys

What public holidays are left in 2017

Ipswich residents will get the day off tomorrow for the show.

IPSWICH residents will get tomorrow off for the show

Caitlyn comes home to launch debut album

Gympie's Caitlyn Shadbolt will launch here debut album Songs On My Sleeve at an exclusive all-ages concert in Gympie on Friday, May 26.

Win tickets to Caitlyn's album launch

Dreamworld may supersize with 'Disneyland expansion'

OWNERS of icon Gold Coast theme park Dreamworld want to super-size the site with accommodation and entertainment to turn it into Australia’s Disneyland.

World’s strongest man reveals incredible 12,000 calorie diet

Brian Shaw won his 4th World's Strongest Man title. Source: Twitter

World’s strongest man reveals incredible 12,000-calorie diet

ABC2 slammed over football exhibition match coverage

Fans weren't too happy with ABC2's coverage of Wednesday night's game.

ABC2 slammed for coverage of soccer exhibition match

'Bulls--t!' Lisa Wilkinson grilled over Karl's pay packet

Join us for a Great Night as we Proudly present Lisa Wilkinson

“And you believe everything you read?”

The Beacon of light for emerging musicians

EXCITING: Dave Beacon has set up his recording studio in a spare bedroom.

'Best sound': This Calliope man might help you break into music.

Rebel Wilson trial: The secret we never could have known

Rebel Wilson outside court

“Most people wouldn’t know it exists,” she said.

Queensland Ballet searching for young Rocky dancers

EN POINTE: Rockhampton's Kenzie Andrews, 10, was chosen as an ambassador for Australian ballet shoe and dancewear company, Bloch

Young ballet dancers invited to audition for QB role

Open for inspection homes May 25-31

Check out this weekend's homes open for inspection

How Toowoomba house prices compare in Australia

For sale sign in front of home.

Here's what $700,000 will buy you in Toowoomba, Brisbane and Sydney

One of Maryborough's most historic homes is still for sale

FULL OF HISTORY: Trisha Moulds is owner of the historic Tinana state known as Rosehill. The beautiful home is currently for sale.

It has been the scene of both joy and tragedies over the years.

New tool reveals which areas are most 'vulnerable' for renters

An aerial shot of Agnes Water main beach. According to new information, people renting in the region are more vulnerable than those in Gladstone suburbs.

Big differences between living in Gladstone and outer areas

Ready to SELL your property?

Post Your Ad Here!