Comments on: Why businesses shouldn’t bother with the 50% investment allowance

By: Adrian Klamer

Adrian Klamer — Mon, 21 Dec 2009 09:39:12 +0000

Adrian is and you are eventually correct, Dale. The investment allowance is an additional 50% tax deduction, not a 50% tax refund. The amount calculated to be your investment allowance reduces your taxable income and not your tax payable. The amount then is applied towards whatever is your rate of tax.(assuming 30% for company) would be $4,500 for your example, not $15,000.

It is effectively 50% of the purchase price ‘taxed at the taxpayers marginal rate’ that your saving, and not 50% of the purchase price itself that you are saving if that makes any sense.

By: Fairlie Rego

Fairlie Rego — Sun, 29 Nov 2009 02:17:33 +0000

I have a small business and was wondering whether I can avail of this facility if I buy the car in my name for business purposes or do I have to buy the car in the company’s name

By: BEN FRIEND

BEN FRIEND — Sat, 31 Oct 2009 08:09:13 +0000

HI ADRIAN
I HAVE A SMALL COMPANY , IM LOOKING AT BUYING A NEW EVERY DAY CAR FOR MY WIFE , SHOULD I BOTHER WITH THIS 50% TAX BREAK OR NOT , WILL I PAY FBT ETC IF IT DOESNT DO REQUIRED KLM . WILL BE SPENDING ABOUT $46,000 ON NEW CAR NO LOANS JUST CASH , THANKYOU FOR YOUR HELP
BEN FRIEND

By: Adrian Raftery

Adrian Raftery — Sat, 27 Jun 2009 08:56:17 +0000

Thanks for all the queries guys – I really think you need to see an adviser directly to answer your queries as there are some particular issues that require more info before I can provide some what if solutions.

eg Peter – you may need to consider your structure as the ATO have come down on husband/wife partnerships in your industry in recent years. In any instance, the car would require the log book method in order to claim investment allowance.

Chris – your business structure is required to determine advice

Patrick – also depends on your structure … sounds like you will go into a taxable loss situation which will mean taht the loss is carried forward til next year so you will have to wait a further 12 months til you get teh rest of the benefit.

By: peter watts

peter watts — Mon, 22 Jun 2009 05:56:42 +0000

hi im a subcontract tiler and i am in a partership with my wife would it benifit me to buy a new sedan for my wife to drive as she does work with me thanks peter.

By: chris

chris — Sat, 13 Jun 2009 00:06:57 +0000

been advised that if I pay for investment and not borrow to make purchase then the ATO has a deeming rule that the money paid for an asset (car ) is deemed at a particular interest rate and may be taxable ( or something like that ) when claiming the 50% investment allowance

By: Dale Godber

Dale Godber — Wed, 10 Jun 2009 07:26:47 +0000

I am looking at purchasing a new ute for my business ie: 50% investment allowance. If what you are saying in your article that you don’t actually receive the said amount is it worth while. I am looking at a vehicle for around the $30k mark. If waht you said is correct i am not getting a $15k deduction but am only getting a $4500.00 saving?

By: patrick from the gold coast

patrick from the gold coast — Sun, 07 Jun 2009 09:14:11 +0000

I have a small business.My accountant estimate for my tax bill this years was $2,000 I expect it to be around $3,000
If i were to spend $25,000 on a new van i understand the max i could save is $7,800 or 31.5 percent.what happens if my tax bill is only $3,000

regards Pat

By: Melissa

Melissa — Sun, 31 May 2009 19:59:56 +0000

Thanks for the advice. I have contacted my accountant to determine the advantages/disadvantages of purchasing a new vehicle versus second hand vehicle for my type of tax setup. It helps to know the facts up front.

By: Angus

Angus — Sun, 31 May 2009 09:08:18 +0000

Melissa – sounds like you might need to see an accountant/other financial adviser! While the internet is good for lots of information, it’s sometimes best to see someone who can look at your situation in detail and advise you personally on what is best – although Adrain has been pretty useful to you so far, I think!