Today I have another good news post for those who are a small business entity (SBE)and thinking about buying a new or used car.
If you fit this criteria then you will be happy to learn that from July 1st 2012 (this financial year we are in now) the first $5,000 of the vehicle will be fully tax deductible. This is in addition to the accelerated depreciation that you receive as an SBE. It makes buying a new car pretty attractive tax wise.
If you bought a car that was $10,000 excluding GST the benefit is as follows:
BEFORE 1st July 2012: $1,500 depreciation deduction
AFTER 1st July 2012: $5,000 immediate deduction plus $750 depreciation. Total of $5,750
That’s an additional $4,250 tax deduction. Not too shabby right?
The vehicle does not have to be brand new and if the car cost less than $6,500 then you can claim the full amount as an outright deduction. The above figures will vary slightly for private use but overall, it’s a great result!