| Prepayments and Capital Acquisitions |
| The restrictions on claiming prepayments, means that Year End Tax Planning is more difficult. |
STS tax payers can still claim (deductible) prepayments up to 12 months ahead. That means they can enter into leases of plant and equipment up to 30 June and pay and claim the next 12 month?s lease payments.
Or, they can even enter into a one year lease, with a 65.63% residual authorised by the Tax Office (ITR IT 28) and can often effectively claim nearly 40% of the cost of the item.
STS taxpayers on a cash basis for GST can benefit from entering into a Chattel Mortgage. Under this type of arrangement:
- they can claim the whole amount of the GST straight back (remember you can?t do this under an HP agreement); and
- for assets that go into the ?General Depreciation Pool?, they can immediately claim 15% of the cost as depreciation.
Non-STS taxpayers on a cash basis for GST who buy plant and equipment before year end can benefit from using a Chattel Mortgage, or bank loan (using other security if necessary).
At least that way, they can claim the full amount of GST back immediately.
7th-June-2004 |
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