Pros - Small Business and General Business Tax Break

Discussion in 'Photography & Video' started by kini_mini, Feb 6, 2009.

  1. kini_mini

    kini_mini Member

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    Quick summary: the government is offering large tax breaks for investment in new gear this financial year.

    See the PM's media release here if you have not heard of this measure.

    Although it hasn't received nearly as much press as the individual tax bonuses, this measure will be far more valuable for those of you who are in photography as a business. So, what are you getting?

    This means that the government plans to give small businesses a 130% deduction on assets acquired in this period. If you are considering acquiring some more gear, you should keep an eye out for the progress of this legislation.

    Obviously it would be better to qualify for the extra 30%, but an extra 10% is not to be sniffed at.

    Unfortunately the government has not yet introduced a bill that tells us exactly how this scheme will be administered. For those with some knowledge of tax law, the only information we have about eligibility is this:

    If people are interested I would be happy to share briefing notes on this issue when the legislation comes out. All the major law firms will be doing bulletins on it - if I'm seriously unlucky I might have to help write one of them :p - so you'll know to go consult your tax advisor about buying new kit :)
     
  2. Squeezer

    Squeezer Member

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    Interesting ... although I've just about made all my purchases for quite a while with the last piece of the puzzle on its way to me soon.

    Subscribed to this thread
     
  3. sgtraven

    sgtraven Member

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    thanks Kini mini, may have to purchase a new 5d MK2 and some longer zooms.
    maybe a bowens lighting setup
     
  4. Dropbear

    Dropbear Member

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    I think you'll find you need to earn more than $20K in a tax year (from photography) before the tax dept will consider you a business and not a hobbyist.
     
  5. michael_

    michael_ Member

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    where did you get that info from?
     
  6. Squeezer

    Squeezer Member

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    I actually thought it was $15k
     
  7. berek

    berek Member

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    Yup that's what my accountant said too ($20k). But keep receipts because once you do, you can claim it all back.
     
  8. Dropbear

    Dropbear Member

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    Tax dept .... photographic expenses are not deductable unless you run a business, not a hobby...

    the determination of a business is earning more than $20K a year by it ...
     
  9. OP
    OP
    kini_mini

    kini_mini Member

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    I'm not familiar with the minimum requirements as they don't really come up in corporate practice. I might have a look at this when I'm back at work if I have some spare time. It sounds like one of those ATO "rules" that they make up on their own as a practice guide, but I'll look into it.

    In any case, we don't yet know what the precise definition of an eligible small business will be under the eventual act. I'll keep you guys posted!
     
  10. Dropbear

    Dropbear Member

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    Feel free Kini Mini but there was a substantial discussion about this very issue on this forum a few months ago.
     
  11. OP
    OP
    kini_mini

    kini_mini Member

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    I just had a look and found a few discussions in the search, but none of them contained a single reference to any tax law, ATO ruling, or in fact anything other than somebody's assertion :) I notice you put some warnings out there about relying on the information, which is a very good idea.

    With the greatest respect, I suggest that Australian tax law is very poorly understood by most people and photographers are no exception. It is possibly the most complex area of the law in this country. Nonetheless, the attitude that tax issues can be resolved by invoking somebody's unsupported opinion is something I would like to see disappear.

    It may well be that there is some kind of $20,000 limit, but without references it is impossible for anyone to verify this for themselves or to see what conditions may apply to it.
     
  12. michael_

    michael_ Member

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    yeh ive never heard of this 20k limit, my accountant has may high profile photographers on his books and he never mentioned any of this to me, but ill ask him.
     
  13. Dropbear

    Dropbear Member

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    Am I in business?

    http://www.ato.gov.au/youth/content.asp?doc=/content/66884.htm

    Can't find specific mention of the 20K limit either .... damn! .... Was sure this was well discussed last time here.

    heres a quote from another forum

    http://www.artforum.com.au/vtopic5478.html&highlight=&sid=259af71c1f92c3078c82e21cf895cc29
     
    Last edited: Feb 7, 2009
  14. Hades_au

    Hades_au Member

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    I don't think this means a 130% deduction, depending on your definition of what a '130% deduction' is. All in all, you won't be able to claim more than what the asset cost, which is how I read what you have written.

    My understanding is that it is simply accelerated depreciation. You can only claim 100% of the purchase price, but you write it off over a shorter period. Also, if your business uses the 'pooled asset' method of depreciation, Division 328, as many small businesses do, you don't appear to qualify anyway.
     
    Last edited: Feb 9, 2009
  15. OP
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    kini_mini

    kini_mini Member

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    I read the announcement of "an additional 30 per cent tax deduction" as being another 30% of the div 40 cost overall - this construction seems more likely to me than accelerated depreciation. We'll have to wait and see what the bill says - it could be, as you suggest, that it just means that you get to deduct more upfront, but "additional" sounds to me like it comes on top of the usual div 40 entitlement.

    Will be interesting to see if the government tries to include them in the draft as well, but with no mention so far it doesn't look promising.
     
  16. djfiesta

    djfiesta Member

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    I have no idea what this all means, but it sure looks interesting.
     
  17. OP
    OP
    kini_mini

    kini_mini Member

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    A quick update - the legislation is supposed to be introduced this coming week, according to Thomson Reuters sources.

    It seems like this has not been overlooked after all:

     

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