One of the ways that many Australians may be looking to recoup or maximise their tax refund’s potential is in spending money on assets for themselves or their business that can be ‘written off” as a tax deduction. Doing so might help save you on the tax that you have to pay after lodging your return, but the initial spend on the asset may not be a viable option for your finances.
Spending money on assets in a bid to reduce tax might seem like a great strategy. But, if you ask us, it might be better for you not to be spending your money on assets for that purpose if you do not actually have to.
Some of the assets that you might be considering purchasing as a tax ‘write-off’ may not count as eligible assets in the first place. An eligible asset is usually one that is used for work-related purposes. 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 if you reinvest that money back into the business or purchase assets that will appreciate and generate an income (such as property or shares).
The Australian government has a number of schemes and tax concessions that may be of use 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.
And, if you’re looking for an even simpler 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. Come speak with us about what purchasing an asset could do to your tax, and if it’s a viable option for you to consider.