What do your children and the $ 30,000 instant tax write off have in common?
Firstly let’s start with this fact.
It’ll come as no surprise that children get more expensive with age. AMP reported last year that the average cost of raising a child between the ages of 5-9 was estimated at $212 per week, rising to $244 per week for a 10-14 year old and $440 per week for a 15-17 year old.
At 18 years of age, we don’t have any statistics for you, but we do know from experience that it may not necessarily shrink from here, especially if you are assisting your children by contributing in part or in full to a car.
So you are wondering how does the ATO fit into all this?
Most would be aware that there is the instant asset write-off threshold of $30,000 that applies to businesses with a turnover less than
$ 50m (valid to 30 June 2020).
So if you were to purchase a car (new or second hand) costing less than $30,000, you can claim a deduction for the entire cost, dependent on your circumstances.
Potentially that can equate to a one off tax saving of $8,000 to $14,000 (subject to your tax rate).
Your structure plays an important part as there may be no requirement for the car to be used for business at all. E.g. those conducting their business via a company or trust do not need to worry about how the car is used. It can be used 100% for private purposes and the deduction applies. For those conducting business as a sole trader or partnership it is not as simple, and a log book confirming business use would be required, which if your child is using it, will most likely be zero and hence no deduction would be available.
There will be other factors to consider to ensure that this will work for you, but they can be worked out over the phone with our office.
So with the 30th June 2019 only weeks away, you may want to consider this now or at least for 2020 when the instant write off is set to expire.