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Year-end Tax Planning Checklist for 2010

A checklist for saving tax and tax planning strategies prior to 30 June 2010.   Just email Jim McGowan at jim@jmaccountants.com.au for your free copy.  

Use our Personal Tax Return preparation checklist

Don't miss out on your tax deductions or tax offsets.  Use our checklist.  Just email us on Tristan@jmaccountants.com.au and we can email back a checklist to prepare your 2009 personal tax return.

 Child Education Expenses Tax Offset (refund) for 2008/09 tax return

 The Federal Government recently announced the proposed introduction of an education rebate for primary and secondary students, applicable to the 2008/09 tax return.  Under the proposal, eligible tax payers will be able to claim 50% for costs up to $750 for primary school students (i.e. a rebate of up to $375) and 50% for costs up to $1,500 for secondary school students (i.e. a rebate of up to $750).

But the rebate is means tested.  To be eligible, the taxpayer must receive Family Tax Benefit (‘FTB’) Part ‘A’ or the child receives certain payments or allowances such as Youth Allowance, ABSTUDY or Disability Support Pension.

Computer equipment and computer running costs (such as internet service provider fees, laptops, home computers, printers and stationery) used by students can be claimed. Make sure you keep receipts and tax invoice for inclusion for the claim.  Example;

A family receives Family Tax Benefit Part ‘A” and have 2 children in school one in primary, the other in secondary. They purchase a $2,000 home computer for use by the children and pay $60 a month for ADSL. Total spending of $2,720 on IT for the students is incurred before end of June 2009.  In their 2008/09 tax return they claim $750 for the primary student and $1,500 for the secondary student. This equates to a rebate of $375 plus $750, so the rebate of $1,125 will be included in their 2008/09 tax return.

 The expenses don’t have to be made on a per child basis.  The scheme permits a “pooling” of several allowances for a more substantial purchase eg. Laptop computer.  Also, if you exceed the rebate limit in this year you can carry forward the excess expenses to next year.

For more information you can go to http://www.educationtaxrefund.gov.au/home/

Prepared by Jim McGowan 27-May 2009 – Phone 02 9437 3030

Jim McGowan Accountants Pty Ltd , St Leonards NSW 2065

jim@jmaccountants.com.au   www.jmaccountants.com.au

Federal Budget 12 May 2009 increases the Investment Allowance to 50% for 'small businesses'

The Investment allowance which had previously been introduced at 30% of the cost of the asset has been increased to 50% of the cost of the asset for small businesses.  The time frame for the purchase has also been extended to 31 December 2009.

This will mean that 'small businesses' as defined will receive a bonus tax deduction of 50% for eligible assets acquired between 13 December 2008 and 31 December 2009 - and installed ready for use by 31 December 2010.  In all other respects the investment allowance is as previously announced (see previous announcement below).

The Governments new 30% Investment Allowance Depreciation incentive is extremely generous for any business with capital equipment purchases contracted by 30 June 2009. 

If you are planning capital assets purchases in the near future make sure you 'contract' for these purchases by 30 June 2009!

The main points of the 30% investment allowance are;

- The asset must be “acquired” by 30 June 2009 and “installed ready for use before 30 June 2010”

- It only applies to new assets.  It DOES NOT apply to second hand assets.

-  It WILL apply to assets under a lease agreement, or HP or bank finance etc (although there are some complications with leasing).

- It WILL apply to new cars (to the extent they are used for business).

- The 30% allowance is calculated on the cost of the asset and is an extra tax deduction over and above normal depreciation (so that over time you claim tax deductions equal to 130% of the cost).

- If you sell the asset you do not have to write-back the 30%

- This deduction is treated like any other expense deduction. If all deductions are greater than income, the tax loss is carried forward  to the next year.