BEWARE RETAIL SPIN AND QUASI-TAX ADVICE
While there appears to be bipartisan support for the Federal Budget announcement of a $20,000 asset write-off for small business, proper tax advice should be sought before making big purchases, according to The Institute of Public Accountants (IPA).
“Retailers are well and truly on the bandwagon with many promoting sales to take advantage of the good news and that is in the true spirit of the policy intent,” said IPA general manager technical policy, Tony Greco.
“However, it is not the retailer’s job to be advising on tax benefits or tax implications. Small businesses should talk to their accountant and obtain appropriate tax advice before going on a spending spree.
“There is no doubt that small businesses should take advantage in the lead up to the end of the financial year, but only if it is in a fiscal position to do so.
“If a business is not making a profit, there is no advantage in purchasing assets it cannot afford. The write-off only applies as a deduction; it is not a cash-in-the-hand and the IPA is urging people to seek advice from their trusted adviser; their IPA accountant.
“There are excluded assets that are not eligible and there are issues around whether in fact someone is running a business that satisfies existing tax rules.
“Having just an ABN does not mean you are automatically eligible. There are complex tax rules to consider such as Personal Services Regime and non-commercial losses which could cause deductions to be denied.
“We urge taxpayers in doubt to seek advice and not rely on misinformation in the market place.
“The retail sector should quite rightfully, be very happy as should small businesses around Australia. This initiative means there is more cash to invest in the economy making it a win-win-win proposition,” said Mr Greco.