Comments on: Two weeks remain on small business tax break

By: exiga 10

exiga 10 — Wed, 30 Dec 2009 07:35:43 +0000

i just decided on a car 28Dec, Chattel Mortgage Loan approved today 30th but car wont be delivered until end of Jan or even later. This means I made it for the tax break, right? How do we prove loan is approved though, finance person at dealership emailed me saying, this email is to confirm that your finance is approved. Will that be sufficient evidence? What else should I ask for?

By: Andrew M

Andrew M — Fri, 18 Dec 2009 09:40:07 +0000

Cool, so in 5 years you could trade it in on 2 cheese burgers…..

By: lazybones

lazybones — Fri, 18 Dec 2009 06:32:10 +0000

Good work Andy, My accountant did explain it to me. But I had a bad case of screen saver eyeballs during her speech. I’ve just spent 41K on a Hyundai which means in 5 years it will be worth $5.95 + GST if it still works.

By: Andrew M

Andrew M — Fri, 18 Dec 2009 05:59:15 +0000

Yeah mate, I know thats how it works, Im kicking myself I bought my new car 2 months before the incentive started.
I did some sums and it actually turned out I would make money If I sold it and bought it new again.

The reason I backed out of it was they dont do my colour anymore

Oh well, Ive got a new trailer on the way that will scrape in under this deal,
about $4.5K worth.

By: JEKYL & HYDE

JEKYL & HYDE — Fri, 18 Dec 2009 04:19:02 +0000

THANKS ANDREW,

i reckon your spot on(for 2 more weeks…)

By: The Realist

The Realist — Fri, 18 Dec 2009 02:38:26 +0000

No, the LCT Limit for the 50% deduction is $57K, even on fuel efficient cars who are eligible for the $75K limit.

By: Andrew M

Andrew M — Fri, 18 Dec 2009 00:36:36 +0000

Car price on road….$44000
GST claim back…….$ 4000 Approx. (it is actually a bit under that because of stamp duty
First year deduction = 22.5% of 40K + 20K = 29K deduction in first year

Second year deduction = 22.5% of 31K = $6975

Third year deduction = 22.5% of $24,025 = $5405.63

Forth year deduction = 22.5% of $18619.37 = $4189.36

Fifth year deduction = 22.5% of $14430.01 = $3246.75

After 5 years the vehicle owes you $ 11,183.26

In a nut shell the Tax break is the equivalent of getting 15% off the sticker price once you adjust for what you actually get back

By: Andrew M

Andrew M — Fri, 18 Dec 2009 00:27:12 +0000

Depreciation starts from the original price and isnt affected by the “Tax break”

By: peter

peter — Thu, 17 Dec 2009 07:58:11 +0000

Jekyll, my understanding is that the depreciation works off reducing values, so if it started at 40K, yr 1 is (say) $8K (100% business use), year 2 is 22% of $32K, so only $6,500, year 3 22% of $25K (about 5K) and so on, so by year 5 your depreciated value is about $17K (assuming 100% business use). Then if you sell for $25K (heh heh heh – I’ll never do that!) then $8K goes into your taxable income (and you have to pay GST on the sale price too). that’s why some people turn the cars over at year 2 or 3 – max depreciation, but really, I think it’s just an excuse…

By: Omale

Omale — Thu, 17 Dec 2009 06:21:56 +0000

For the purposes of the 50% investment allowance, I understand that the LCT limits this deduction to $57K. My question is whether fuel-efficient cars’ claim limit is up to the $75K ‘LCT’ allowable for them?