50% Depreciation 'Bonus' on a Rangie - Any tax accountants here?

[spudboy]

Not sure if anyone will own up to being an accountant, but I have a general question about the 50% depreciation allowance.

I gather that for businesses with a turnover of less then $2m the 50% allowance runs until December.

Is there a limit on new vehicles used for business use and what can be claimed?

Lets say I could convince my company to replace my 2002 RR HSE with a new one. Lets say I loaded it up with extras and to make the maths easy the total came to $200K.

Could the company then claim back $100K in depreciation on this? Is there any limit to which the 50% bonus deduction applies for vehicles (e.g. like the Luxury Car Threshold of $57K or whatever)? I gather you can still claim the normal depreciation on the vehicle (22.5%? - which would be an extra $45K in the first year?? = Total deduction of $145K ??).

Seems like a good lurk, but prob too good to be true....

Thanks
David

[ariddell]

I think the 50% is only up to the LCT threshold going by what i read, beyond that the standard deduction applies.

Made sense as the incentive seemed to be geared more towards shifting Falcons and Commodores.

Am not an accountant or anything so could well be wrong, but i had a similar flirtation with the idea too the last time i swung past the local Lotus dealership... :)

[Jamo]

Yes, the 50% is only up to the LCT limit. And, it is a bonus deduction so you can still claim the normal depreciation. As it's a bonus, it's not pro rata in the year you buy the car like the normal depn is, you get the full 50% in the first year.

It can be claimed on any vehicle that is either new or a demo and it must be bought from a dealer.

I'm considering visiting the porsche dealer at the end of the monthB)

[mns488]

yep only up to the depreciation limit, the car limit for 2008-09 is $57,180 and is indexed annually in line with the motor vehicle purchase sub–group of the CPI.

Anything above this equals a lot of non deductible vehicle...

The vehicle cannot be leased (only CHP/Chattel Mortgate etc)

The vehicle must be new or demo

The vehicle must be delivered before 31/12/09.

[spudboy]

Bugger. I was on to a very cunning plan, that seems cannot now work :mad:

Thanks for the info.

[Rayngie]

am looking at doing this myself, can someone help with raw figuers, say if i was to buy a $57K car, what the savings etc in dollar terms would be?

appreciate any help,

cheers,

Ray

[Jamo]

It all depends how you're set up.

You will be able to claim a $28,500 deduction off your taxable income under the bonus scheme. Thus, if your taxable income was say $100,000 after all other expenses, you would now have a taxable income of $71,500.

If you are a Coy (with a flat tax rate of 30%), then this would lower your tax from $30,000 to $21,450 for the year 2009/2010.

You can also claim the normal depreciation as well, but that is pro rata in the year you acquire the car. The depn using the Diminishing method is 30% on a MV. Thus if you acquired the car on 31 December 2009, you could also claim 30%*57,000 = $17,100 * 1/2 a year of ownership = $8,550.

This would further reduce the taxable income in the example above to $62,950 and the tax payable to $18,885; thus saving $11,115 off the tax bill.

Of course, this assumes 100% business use. If you only have say 50% business and 50% private then you can only claim the 50% that is used for business, so you multiply both the bonus and the normal depn by 0.5.

[RANDLOVER]

For those looking to reduce their tax, I believe the 2018-2019 window to put extra into your super is closing, as it only lasts 5 years, you can put extra in up to the $25 000 total cap as long as your super balance is under $500 K IIRC. The usual this is not financial advice and recommendation to check with your accountant, tax agent, ATO, financial planner, etc apply.

Concessional contributions and contribution caps | Australian Taxation Office (ato.gov.au) (https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Super-contributions---too-much-can-mean-extra-tax/?anchor=Concessionalcontributionsandcontribution#C arryforwardunusedconcessionalcontributi)

[RANDLOVER]

My previous post was incorrect as in the 2018-19 window to put some extra into one's super will only drop off this year as it went back 5 years but only as far as 2018-19. Also, judging from my experience, it seems the ATO uses up all of the current years cap before going back to the oldest year available. This also only applies if your total super balance TSB Total superannuation balance | Australian Taxation Office (ato.gov.au) (https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/growing-and-keeping-track-of-your-super/caps-limits-and-tax-on-super-contributions/total-superannuation-balance) was under $500 K at the end of last financial year.

[RANDLOVER]

If your online ATO portal is anything like mine it will have just updated (early April) last year's concessional Super cap, which makes things easier to work out. However you will still have to calculate how much of this financial year's 30k cap is left, as that has to be used before they go back to the oldest 2018/19 cap which is about to expire, in my experience.