Australians are always on the lookout to recoup or maximise their tax refund’s potential. One way is to spend money on assets for their business that can be ‘written off” as a tax deduction. Doing so might help make a saving on the tax that you have to pay after lodging your return. The catch is the initial spend on the asset may not be a viable option for your finances.
Saving Tax or Saving Nothing?
Spending money on assets in a bid to reduce tax might seem like a great strategy. But, it might be better for you not to be spending your money on assets for that purpose if you do not have to.
Some of the assets purchased as a tax ‘write-off’ may not count as eligible assets in the first place. An asset used for work-related purposes is an eligible asset. In this case, a BMW that you bought for personal use probably won’t cut it.
Regardless of whether you’re an individual looking to ramp up your wealth creation activities, or a business owner seeking greater profitability, you should always focus your spending on a primary income-generating purpose – any associated tax benefit should be secondary. It might be better for you to reinvest that money back into the business. Alternatively, purchase assets that will appreciate and generate an income (such as property or shares).
The Australian government has several schemes and tax concessions that may be useful to you if you are considering purchasing an asset as a business or business owner. Some of these schemes and concessions may only be available if you meet certain criteria.
If you’re looking for an even more straightforward way to receive a tax deduction for your return, accounting fees are a tax-deductible expense that we’d be happy to help you out with. Speak with us about what purchasing an asset could do to your tax and if it’s a viable option for you to consider.
