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All advice contained in this communication is o a general nature and should not be relied on as a reliable source or Tax advice. The IT Tax Tips contained in this document were regarded as correct at the time o writing, changes to legislation or proposed legislation may alter these Tips. We recommend you contact the Australia Tax Of ce, your proessional advisor or a registered Tax Agent or advice in respect o your personal or business situation.
Prepayment o IT services
1
Depreciation
2
For
Small Businesses
turning over less than $2 milliona year, prepayment o the ollowing years IT services is agreat way o tax efectively managing your uture IT costsand having a complex area o your business efectivelyoutsourced to an expert.A prepayment is not apportioned but allowed in ull as adeduction in the year in which it is incurred i all servicesin respect o the prepayment are provided with 13months o incurring the expenditure.Your Computer Troubleshooter can provide prepaymento IT services using either a
managed services contract
or a
block time services agreement.
A
managed services contract
has a dened servicelevel and a monthly management component. Thisallows your network to be proactively managed andserviced like an outsourced IT department.
A
block time services agreement
is an agreement toprovide a specic number o hours o services at anagreed rate. This is a responsive contract where youuse your Computer Troubleshooter as your serviceprovider on a pay or service basis over the year.Generally this must be expended within the 12 monthperiod.
Example -
A Small Business decides to contract Computer Troubleshooters or it’s 2010/2011 IT outsourcingcontract or $500 a month. The $6,000 contract covering12 months is signed and paid prior to end o June 2010.The business can claim the $6,000 deduction in it’s2009/10 tax return.
The depreciation rate on IT equipment is quite high
due to their low expected lie compared to many otherdepreciable assets. For depreciating IT assets over $300,the efective lie is 4 years and 3 years or laptop computers.Small businesses using the simplied depreciation rulesin many cases can claim an immediate deduction or adepreciating IT asset costing less than $1,000. The Federal Budget in May 2010 announced, subjectto legislation approval, that in the 2012/13 tax year thisinstant write of or small business will be increased to$5,000 which will save on depreciation calculations andimprove cash ow.However in the meantime the existing rules apply, whichmeans while equipment may last beyond it depreciatedlie you may no longer have depreciation tax benets.So i you upgraded your IT equipment you could beexperiencing the benets o the
latest technology taxefectively with a lower downtime risk and betterrunning costs.
Example -
A small business has a ully depreciated server which isve years old and expensive to maintain with a high risk o ailure.It replaces the server with a new one purchased and installed or $3,000 and depreciates the equipment on anongoing basis.Depreciating the $3,000 over the lie o the asset movessome expenses rom cash to non-cash and reducingbusiness continuity risk.
2010 IT Tax Tips
As the end o the Financial Year 2009/10 approaches we are starting to think o ways o ensuring our businessis tax efective, so now is the time to start planning and implementing. The recent Federal Budget in May2010 held ew new advantages or this nancial year rom an IT perspective however many options remain.Here are our 6 IT Tax Tips you might consider with advice rom your tax advisor:
For more inormation talk to your localComputer Troubleshooters - Your Trusted IT Advisorcall
1300 28 28 78
and enter your postcode
www.computertroubleshooters.com.au
For more inormation talk to your localComputer Troubleshooters - Your Trusted IT Advisorcall
1300 28 28 78
and enter your postcode
www.computertroubleshooters.com.au
All advice contained in this communication is o a general nature and should not be relied on as a reliable source or Tax advice. The IT Tax Tips contained in this document were regarded as correct at the time o writing, changes to legislation or proposed legislation may alter these Tips. We recommend you contact the Australia Tax Of ce, your proessional advisor or a registered Tax Agent or advice in respect o your personal or business situation.
Education Tax Reund
3
Home Computer Services
4
I you have used Computer Troubleshooters or servicinga computer that has been used or deriving income ormanaging tax afairs a proportion o the amount may beclaimed as a deduction or tax purposes.IT costs such as internet access, printer consumables(toner and paper), depreciation and computer securitysubscriptions may be proportionally deductible in thesame circumstance.Like all
personal tax deductions
you would need toprovide proo o the expense and veriy the proportiono the cost that is deductible.
Example -
A home user who uses their home computer or managingtheir tax and nancial aairs has previously veried withtheir tax consultant that 30% o the costs associated withthe computer are tax deductible.The home user has used Computer Troubleshootersduring the year and spent $300 in repairing the computer and has a tax invoice and receipt.The owner can include the $300 in their computer runningexpenses and gain a $90 deduction or the costs (30%) intheir 2009/10 tax return.
The Federal Government’s education tax rebate orprimary and secondary students has continued or thistax year with the amounts eligible indexed rom last year.Eligible tax payers will be able to claim 50% or costs upto
$780 or primary school students
(i.e. a rebate o upto $390), and 50% or costs up to
$1,558 or secondaryschool students
(i.e. a rebate o up to $779).
To be eligible, the taxpayer must receive Family TaxBenet (‘FTB’) Part ‘A’ or the child receives certainpayments or allowances such as Youth Allowance,ABSTUDY or Disability Support PensionComputer equipment and computer running costs(such as internet service provider ees, laptops, homecomputers, printers, toner and stationery) used bystudents can be claimed. Make sure you keep receiptsand tax invoices or inclusion or the claim.
Example –
A amily receives Family Tax Benet Part ‘A” and have 2children in school, one in primary, the other in secondary.They purchase a $2,000 home computer or use by thechildren and pay $60 a month or ADSL. Total spendingo $2,720 on IT or the students is incurred beore end o June 2010.In their 2009/10 tax return they claim $780 or the primary student and $1,558 or the secondary student.This equates to a rebate o $390 plus $779, so the rebateo $1,169 will be included in their 2009/10 tax return.
As the end o the Financial Year 2009/10 approaches we are starting to think o ways o ensuring our businessis tax efective, so now is the time to start planning and implementing. The recent Federal Budget in May2010 held ew new advantages or this nancial year rom an IT perspective however many options remain.Here are our 6 IT Tax Tips you might consider with advice rom your tax advisor:
2010 IT Tax Tips
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