Steps
- Is the company a small or large business?
There are different taxation rules for small business so you will need to read, Are you a small business for the current year?
- Does the investment allowance apply if I am a small business or a large business? This information can be found here
It is important to note that there are different asset rules for small and large businesses.
- Which assets are eligible?
Will spending on new computer software be eligible? Or does the asset need to possess more of a plant type characteristic? Does the investment allowance apply to motor vehicles and is that expenditure subject to the ‘Luxury Car Limits’? What about second-hand assets? Are demonstrator motor vehicles considered second hand? What about new expenditure on existing equipment?
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- What sort of timeframe do we have to purchase the asset and have it installed ready for use?
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- How much is the allowance?
How much do we have to spend? Is that value inclusive or exclusive of GST?
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- What are the consequences (clawback) when we sell or dispose of the asset?
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- What about financing? Are leased assets eligible?
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Now that you have established the eligibility criteria its time to put together your tax planning proposal.
- Details such as type of plant, equipment or motor vehicle to be purchased.
- Cost of the plant, equipment or motor vehicle.
- Additional cashflows and additional costs attributable to the new plant equipment or motor vehicle. A popular method is the cost/benefit analysis. It is important to consider both quantitative and qualitative data.
- Now the taxation savings need to be calculated.
click here to download an excel spreadsheet to assist with calculations
- The final step is to collate all of the information and present it to the CEO in the form of a report.
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