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Empower your business with strategic tax planning tailored to your unique needs with BDR Business Accountants Mandurah. Our expert team in Mandurah specializes in crafting comprehensive tax strategies that maximize your financial efficiency, minimize liabilities, and optimize your long-term growth. Let us navigate the complexities of tax laws and regulations, ensuring compliance while strategically leveraging opportunities to optimize your financial outcomes. With BDR Business Accountants Mandurah, unlock the full potential of your business through proactive and personalized tax planning solutions.
Purchasing new assets before 30 June can have potential benefits for business owners. This strategy can allow businesses to take advantage of various tax incentives and deductions available, such as the instant asset write-off and accelerated depreciation measures.
Here are some considerations regarding whether to buy new assets before the end of the financial year and whether to pay cash or use a finance facility: Instant Asset Write-Off: The Australian government intends to adjust the instant asset write-off scheme to only apply to assets costing under $20,000, allowing businesses to immediately deduct the cost of eligible assets purchased and installed for business use. This legislation has not been passed at time of writing and the threshold for this scheme and the assets covered may vary, so it’s essential to check the current tax laws and eligibility criteria with a tax advisor.
Accelerated Depreciation: In addition to the instant asset write-off, businesses may benefit from accelerated depreciation measures. For example, an asset that exceeds the $20,000 immediate write off threshold is depreciable at 15% in the first year and 30% every year thereafter.
If the asset is bought and installed ready for use just before 30 June, you still get the full 15% deduction in the first year.
Cash vs. Finance: When deciding whether to pay cash or use a finance facility to purchase new assets, consider factors such as cash flow, interest rates, and financing terms. Paying cash upfront may provide immediate ownership of the asset and avoid interest costs associated with financing.
However, using a finance facility can help preserve cash reserves and provide flexibility in managing cash flow. Additionally, financing costs may be tax-deductible, providing potential tax benefits.
Tax Planning: Business owners should assess their overall tax position and cash flow needs before making any significant asset purchases. Consider consulting with a tax advisor/accountant to evaluate the potential tax implications and financial consequences of buying new assets before the end of the financial year. They can provide personalised advice based on your business circumstances and help optimise your tax planning strategies.
In summary, purchasing new assets before 30 June 2024 can be a tax-effective strategy for businesses, allowing them to take advantage of tax incentives and deductions. However, this should only be done if the business needs the asset, otherwise spending a lot of money on an unnecessary asset to save a small portion of tax doesn’t make sense. Whether to pay cash or use a finance facility depends on factors such as cash flow, financing terms, and overall tax planning objectives.
If the business has plenty of surplus cash that is more than enough to buy the asset many times over, again it doesn’t make sense to undertake the cost and burden of financing. It’s essential to consider these factors carefully and seek professional advice to make informed decisions aligned with your business goals.
Call us on 08 9535 1566 or visit https://bdrbusiness.com.au
BDR Business Accountants
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