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Point of Sale Tax Exemptions: Australia

I’ve failed you, dear readers. Regretfully, I will not be able to impart any specific and actionable advice for you. …

By Dave Eagle

Photo by Jake Rust
Photo by Jake Rust

I’ve failed you, dear readers. Regretfully, I will not be able to impart any specific and actionable advice for you. I’m led to understand there have been some exciting changes in Australian tax law that will result in you being able to purchase hardware–“for next to nothing,” I was told–for the next couple of years. I followed up on this tip by reading a few relevant articles on the topic, and I’m here to tell you that I cannot confirm that these new tax laws are (a) exciting, or (b) able to provide dramatic savings on hardware purchases. I want to be very clear, though, that this doesn’t mean the information I was given is wrong. It only means that I cannot confirm it, and the reason for this is simple. I don’t understand tax law one bit. Frankly, it destroyed a little bit of me just to read it.

Chances are it makes no sense to you, either, because you’re a human–that unique mix of a soul, muscle and warm blood–and tax law is written by a secret society of vile subterranean reptiles that taste like chicken when slow-cooked over an open flame. Either that, or a ruling class which purposely complicates these things so that only the people who can afford the best accountants get to keep most of their money. I don’t know, which one makes more sense to you?

Since I can’t produce a clear narrative around the highly confusing statements I read at the Australian Tax Office website, I’m just going to do this listicle style. Presented as a series of unconnected facts, about which no conclusions are drawn, I believe I’ve provided you with the tools and facts to make your own conclusions (or to pay someone more expert than you to make them for you). And let me pre-source all my information by saying that any text in bold is a direct lift from the ATO site.

* The new law raises the price threshold at which assets can be be immediately deducted. Previously the limit was $1,000, with anything over that having to be placed in a depreciation pool. For 2015, the ceiling is being set at $20,000.

* The law will affect purchases made between May 12, 2015 (starting at 7:30pm, for some reason) until the close of business on June 30, 2017. Deduct your assets now, though, and the government will throw in this bonus Super Shammy, a $19.95 value, absolutely free!

* The new law is not actually a law yet. It’s only been proposed at this point. As this law change will be retrospective if enacted, it is important that small businesses understand their obligations under both the existing and proposed laws. You need to prepare now for both possible outcomes, whatever that entails.

* Any business that meets the definition of small business entity, that is one with an aggregated turnover less than $2 million, may be eligible to immediately deduct the cost of assets acquired for less than $20,000. What is aggregated turnover? I do not know, and I won’t hazard a guess.

*Any item that is considered a depreciating asset that costs up to $20,000 is eligible. No, this does not include your mail-order spouse. It could be computer hardware, vehicles, tools/machinery, office furniture and supplies, etc.

* The law also applies to software, which is not a depreciating asset, but what the heck, the more the merrier AMIRITE?

* According to this guy, in this post that made my eyeballs pulse with hypertension, purchase made before June 30, 2015 will receive 30 cents back in tax. From July 1, to June 30, 2017, that number goes to a 28.5 cents. Now, I’ve got to assume this means 30 cents per dollar of tax, or 30 cents per dollar of the price, or something that is not just a measly sum of inconsequential nothingness. But that’s something for you and your accountant to figure out.

* If the entity is registered for GST, then the GST exclusive amount is taken to be the cost of the asset. Where the entity is not registered for GST, then the GST inclusive amount is taken to be the cost of the asset.

That about sums it up for you. If the law passes, then effective July 1, anything you bought after May 12 will cost you less–by how much I do not know and through what dark magic I cannot tell you. Or, the bill doesn’t pass, and things will be exactly the same as they are right now. Either way, save your receipts.  And now, to restore some beauty back to your world.