Business Tax Break Concessions, Assets, Equipment Leasing, Tax Advice and Business Accounting Services - SUMMIT Business Accountant

Janine takes on the role of Director Compliance Services, and will be preparing your necessary taxation documents and financial statements. In addition to this, Janine will be available for you to consult on tax and other business strategies to help you improve your financial situation, or that of your business.

Janine’s particular area of expertise is Self Managed Superannuation Funds (SMSFs). She is keen to ensure future financial security for you and any of your employees.

Janine graduated from RMIT with a Bachelor of Business. She is a CPA, has earned a Diploma in Financial Services and is PS 146 compliant. She combines her impressive qualifications with 14 years of experience in public accounting, in particular managing a team dedicated to providing high quality customer service.

She is a valuable addition to Summit Accountants & Business Advisors and we’re thrilled to be able to share with you her passion and experience.

Ron is an experienced accountant who is also currently running his own expanding small business. He joins us in a consultancy role and will be available to advise you on taxation and corporate strategy for your business.

As a hands-on business owner he is in a position to understand what issues you face as a small business owner and to offer you practical advice and solutions.

With more than 35 years working in public practice, we are confident that he will be of great assistance to you.

We’d also like to welcome any new clients who have joined us as a result of Janine and Ron joining Summit Accountants & Business Advisors. We are excited about working with you in the near future.

Tax break for Small Business and General Business

The announcement of the investment allowance for SMEs has a lot of business owners asking how they can make the most of this incentive. But what exactly is the Small Business and General Business Tax Break and how does it benefit you?

Here we answer some of your commonly asked questions.

How does the tax break work?

Your business will be able to claim a bonus 30% deduction on the cost of an eligible asset. You must purchase or begin to construct the asset between 13 December 2008 and 30 June 2009. You must start using or have completed the construction of the asset, ready to use, by 30 June 2010.

For example:

Cathy runs a cafe business through her company, Roma Pty Ltd. The annual turnover of Roma is less than $2m and the company is a small business entity for tax purposes.

Roma purchases a brand new oven on 1 May 2009 for $6,600 (GST inclusive). The supplier installs the oven on 15 May 2009 for $550 (GST inclusive). Roma is entitled to claim GST credits of $650 and the cost of the oven for tax depreciation purposes is $6,500.

As Roma is a small business entity the expenditure threshold is met and the company is entitled to the 30% tax break. Roma can claim a bonus tax deduction in its 2009 tax return of $1,950. Roma will also be able to claim depreciation deductions based on the cost of the oven so that the total deductions claimed by the company will amount to $8,450 (i.e., $6,500 depreciation deductions plus $1,950 bonus deduction).

What if I miss the deadline?

If you cannot meet the 30 June 2009 deadline, you will still be eligible for a 10% deduction on the cost of an eligible asset if you purchase or being to construct between 30 June 2009 and 31 December 2009. You must start using or have completed the construction of the asset, ready for use, by 31 December 2010.

What is an eligible asset?

The asset must be a new, tangible, depreciating asset that you would ordinarily purchase during your financial year.

If your business turnover is less than $2 million per year, the asset needs to cost more than $1,000 to be eligible.

If your turnover is more than $2 million per year, the asset needs to cost more than $10,000 to be eligible.

Can I buy a second hand asset and claim the tax break?

No, assets must be new. They cannot have been used or installed for use at a different location. Assets can be demonstrator models which have been used for testing or demonstration purposes only.

Is software eligible?

No, software is an intangible asset and so cannot be claimed for the tax break.

How do I claim the tax break?

You can claim the tax break as a deduction in the tax return for the year you begin using the asset, or have it installed ready for use.

Can I purchase an asset overseas and still claim the tax break?

Provided the asset is primarily used for your Australian business, you can purchase an asset overseas. The asset does not necessarily have to be located in Australia when you start to use it or have it installed ready for use. However, if it is reasonable to conclude that it will never be used in Australia, you cannot claim the tax break.

Does the tax break affect other deductions?

No, the tax break has been introduced to give SMEs some relief and to ensure that business investment in Australia continues and the economy keeps ticking over.

You will still be able to claim depreciation deductions for the life of the asset.

Can I claim the tax break for leased equipment?

This is something that needs to be viewed on a case by case basis. If you hold the asset and can claim a depreciation deduction for the asset, it is likely you can claim the tax break.

If you would like more information about the tax break or whether an asset is eligible, please contact us.

The rise of the bargain hunter

Everyone loves getting a bargain and the current economic downturn makes now a bargain hunter’s dream.

With people spending less, the retail market has responded by cutting prices, Real estate has also dropped in price. All around, there is a feeling that supply is outweighing demand. And when supply is greater than demand, history has shown that prices drop.

Many experts consider this period a buyer’s market and this is not just limited to consumers. Business to business and investors are also feeling that sellers are under pressure and that services and goods can be bought for less. Such a climate brings out the bargain hunter.

So, what does this mean for your business?

Most SMEs are both buyer and seller. The main concern for the seller is how to reach sales and profit targets for 2009. As people spend less, the number of customers reduces and businesses end up competing for the same customers. These customers are less inclined to buy. There are fewer of them and they feel they have time on their side. Often they may hang out for a better deal.

So how do you conduct business in a buyer’s market?

Here are a few handy tips:

1. Accept the market conditions
These conditions are likely to get worse before they get better, so there’s no point ignoring them and hoping they’ll go away.

2. If you are a buyer, bargain on the price
Fare prices aren’t necessarily the price you need to buy at. Many sellers will go to some lengths to ensure you purchase from them. However, some sellers will also not be willing to lower prices. It depends on strength of position. Be willing to bargain.

3. If you are a seller there are three things you need to consider:

How your pricing compares in the market
Know your competitors prices. Your customers will.

What your margins and break ever points are
In order to negotiate prices with a bargain hunter, you need to know how it will affect your bottom line.

What your options are
Can you position yourself uniquely in your market? If so, you could be able to justify your price.

4. Differentiate your business
Offer something different to your competitors. It could be in product format, packaging, delivery or service arrangement, but having a point of difference will help you justify your price. It’s about separating yourself from your competitors.
Customers will always pay for quality and value. If you can position your company as a supplier of both, your product will continue to hold its value. 2009 is not necessarily about working harder, but it’s definitely about working smarter. Your business strategy will be increasingly important during this period. Ensure your business is positioned accordingly for the market.

If you’d like more advice about how to manage your business during the economic downturn, or even take advantage of the current economic situation, please contact us at Summit Accountants & Business Advisors.

Quote of the month

“The ultimate measure of a man is not where he stands in moments of comfort and convenience, but where he stands at times of challenge and controversy.”

Martin Luther King, Jr

The material and contents provided in this publication are informative in nature only. It is not intended to be advice and you should not act specifically on the basis of this information alone. If expert assistance is required, professional advice should be obtained.