Advice from salesmen flagged incorrect by accountants


Taxpayers warned against applying for an Australian Business Number to receive a 30 percent tax allowance for their new vehicle

Taxpayers are being warned against applying for an Australian Business Number (ABN) to receive a 30 percent tax allowance for their new vehicle.

AccountantsRus CEO Adrian Raftery says clients are being given incorrect advice from car dealers in a ploy to increase sales.

"We have seen a spate of clients being told in the car yard to apply for an ABN so that they can get 30 percent back from the taxman," he says.

"This is simply wrong and needs to be addressed before it spirals out of control."

Raftery says the current financial climate is seeing sales people without tax qualifications trying to come up with ill-advised, money-raising schemes.

While the investment allowance is a legitimate part of the Federal Government stimulus package, it is only available to businesses.

It is an additional tax deduction for companies on new eligible depreciating assets acquired between December 13, 2008 and June 30 this year.

Small businesses with a turnover of less than $2 million have a minimum expenditure threshold of $1,000, while a $10,000 threshold applies to other businesses.

Raftery stresses that only profitable businesses and not employed individuals should apply to get the incentives.

He says the allowance is designed for businesses which claim car expenses under the ‘log book’ or ‘one third of the actual expenses’ method.

"Those businesses that use the ‘12 percent of original value’ or ‘cents per kilometre’ method to determine their car deductions are unfortunately not eligible for the allowance as the legislation states that the car must be principally used for business purposes," Raftery adds.

He also says a luxury car limit of $57,180 applies.


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