Home' News Bulletin : ADA News Bulletin June 2015 Contents 42
a purchase was to be made it must be made during this period
and the item must be installed in the business ready for use by
midnight 30 June 2017.
HoW DoeS it Work?
The legislation has not been fully drafted as at the date of
publication of this article, however some key mechanics of the
legislation are likely to be:
• If you lease the item you don’t own the item and therefore will
not be eligible to claim the accelerated deduction.
• If you purchase the item under a separate type of finance
contract, that contract will have to confer direct ownership to the
business owner, in full, at the purchase date.
• Acceptable forms of finance are chattel mortgage, loan, or asset
• A cash payment is also acceptable (of course).
Even if you finance the purchase and have only had the item
installed ready for use for one day, say 30 June, you are still eligible
for the full claim.
old or New?
• Under the original temporary accelerated depreciation measures
during the global financial crisis, businesses were required to
purchase new items of plant and equipment2.
• We anticipate this to be the same under the new temporary
measures as only a purchase of new items of equipment will likely
provide the economic stimulus required by the budget.
staNd aloNe or aggregate?
The budget proposes that the accelerated depreciation is based
on each item of equipment not an aggregate. So if you purchased
an Autoclave for $15,000 and handpieces for $10,000, your total
spend during the financial year may have totalled $25,000 which
is more than the threshold. The proposed measures however,
look at each purchase separately. So in this case, as both items
were less than the $20,000 threshold, both are eligible for the full
accelerated depreciation claim.
what aBout items PurChased Before the Budget?
These will not be eligible for the accelerated depreciation claim.
what aBout stoCk aNd materials?
Stock and materials are specifically excluded from the proposed
“the ato has made it very clear
that the net income each year
of incorporated medical and
dental practices must be paid out
to the principal...”
The headline item of interest for most practices will be the
accelerated depreciation measures, however there is also a modest
tax cut available for small business with an aggregated turnover of
less than $2 million. This measure may prove difficult to access for
those dentists practicing via a company as the income attribution
rules generally apply to incorporated dental and medical practices.
The ATO has made it very clear that the net income each year of
incorporated medical and dental practices must be paid out to the
principal3 at the end of each financial year, so the mechanism for a
taxation reduction is not clear at this stage.
For non-incorporated dentists in practice the rules appear much
simpler. You will receive a taxation cut of 1.5% per annum up to a
maximum threshold of $1,000, this will be received as a tax credit
on your return.
The tax cut, whilst modest, is still a saving of up to $1,000 a year.
Further, the accelerated depreciation is an attractive proposition for
those practices looking to invest in new equipment. It is likely that
it will also stimulate significant growth in this part of the economy.
We feel it’s a good win for small business and the economy
It is our strong recommendation that it would be prudent to
wait until the legislation is finalised prior to investing in new
This article is designed to provide generic information only and should
not be viewed as a recommendation to act. Individuals should seek
advice from a qualified adviser to ensure their actions are commensurate
with their financial needs and requirements. Whilst every effort has been
undertaken to ensure accuracy of information at the time of publication,
the information contained within the article may have changed prior to
and subsequent to the articles publication.
aboUt tHe aUtHor
Heath Stewart is a Chartered Accountant and a Director of Ecovis Clark
Jacobs, Accounting and Business Advisers, specialising in providing advice
to dentists. Advice includes practice purchase and sale advice, planning
for your financial wellbeing, benchmarking, taxation, superannuation,
insurance and practice management advisory. For a free assessment of
your practice and financial position and to see how you can achieve your
goals, please do not hesitate to contact Heath on (02) 9264 1111
References supplied are available on request from firstname.lastname@example.org
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