how does 50% tax rebate affect VW van owners?

[farmer]

Can someone explain how the 50% tax deduction on new cars for ABN holders would affect/benefit someone looking to buy a VW Van in particular a multivan?

[Tornado T5]

Can someone explain how the 50% tax deduction on new cars for ABN holders would affect/benefit someone looking to buy a VW Van in particular a multivan?

If I read it right, you can claim back 50% of the purchase price in your 2008/09 company tax return if the goods are received before 30 June '09 or in the 2009/10 tax return if you purchase before 31 Dec 2009. So say you bought a $50K VW, you can claim a $25K deduction in your tax return, plus the GST I assume and then normal depreciation as time goes by. I'm thinking about it because interest rates are lower today then 2007, when I bought my T5, the only prob is the trade-in offer versus my current outstanding pay out figure. I'm very close to my 60K service and might get a new quote.

http://www.treasury.gov.au/content/s....asp?NavId=022 click on the FAQ to download it and about page 4 and page 18....and I found this part

Question 10 — Does the Tax Break affect any other deductions?
34. The Tax Break will provide a bonus deduction. It has no impact on deductions for an asset’s decline in value claimed under Division 40. This means that, over time, a taxpayer could effectively claim deductions of up to 150 per cent of the asset’s value.

http://www.smartcompany.com.au/econo...-to-do-it.html

[shogun2]

It means I'll probably buy a Golf GT TDI

[gerhard]

The accounting would go something like

Registration/insurance - write off against revenue
Vehicle price - claim GST back, depreciate the rest
Stamp duty - add to (vehicle price-GST) and depreciate.

The originally mooted 30% investment allowance was on top of the 15% first year depreciation, giving a total 1st year deduction of 45%, then your 2nd year 30% depreciation is based on the residual value - ie, depreciable value-15% 1st year and so on.

It's not clear to me yet if the budget change to 50% is a growth in the investment allowance or a substitue for the 1st year 15% depreciation. I will be seeking clarification from my accountant. If anyone knows already, pleas clarify.

Clearly if it's a growth in the investment allowance, it's a sweeter deal, because your total depreeciation is 150% of the vehicle cost.
But if it's a substitue for the 1st year dep'n it's nice in year 1, but your second & subsequent year's depreciation comes off a smaller residual and our overall depreciable remains at 100% of the cost.

[Tornado T5]

To add to the confusion, a Barloworld VW print ad in today's "The Age" claim 30% business deduction...and it seems Barloworld Bayside (Morrabbin Vic), now sells commercial vehicles...might have to do some prelim. shopping me thinks.

[gerhard]

I've done a little more reading.

For businesses with over 2 million turnover, it's a 30% allowance expiring in June 2009.

For small buasinesses under 2 million, it's a 50% allowance, meaning you get a total of 150% writedown (eventually). For a car in year 1 it's the normal 15% plus the allowance of 50%.

As always, check with your accountant, don't take this information as advice. Further caution - spending money just to save tax is the wrong motivation, just ask Timbercorp investors......

[Tombi]

I have been fantasizing about buying a T5 for about 2 years, but this latest offer by Kevin Rudd was toooooo tempting not to go for it.

Simply 50% of the purchase price, after GST is deducted from your business income.
So if the deduction off your business income is say $20,000.00 x 30% company tax rate. You will be saving $6000.00 in tax straight up. Not a bad deal I say, plus you also receive the usual 22.5% depreciation allowance.

So on a $42,000.00 T5 you will be receiving a deduction of around $715.00 per month x 12 =$8590.00 in the first year.

Don't forget your business has also received the GST refund of around $3850.00 on a $42,440.00 128 kw Crewvan.

I'm pretty certain thats how it works.