Tradies are being warned against seeing the Federal Government’s Small Business Benefits Scheme as a spending free-for-all.
Perth tradies finance expert Shane Smith said the scheme provided incentive for tradesmen to purchase equipment and vehicles to help assist and grow their businesses.
“But tradies need to be careful that they don’t see the scheme as an opportunity to buy a whole lot of personal items that won’t be used for business,” said Mr Smith.
“For example, you can’t buy a set of power tools and think you can claim it for business if your core business is not in construction,” he said.
“I’ve seen a few tradies, and their wives, thinking they can buy up big on things like white goods and claim the tax benefit.”
“The scheme has certainly sparked a flurry of last minute buying in the trades industry and I’m sure there will be more in the next few days before the end of the financial year.”
“I’ve already witnessed this first hand at the Perth Tradie’s Expo last weekend.”
“I was amazed at how many tradies were pushing empty trolleys going into the expo and coming out with trolleys overflowing with new power tools and other work toys.”
“However, tradies do need to proceed with caution to stay within the rules of the new scheme.”
Mr Smith said tradies should consider the following before purchasing:
The cost of the item cannot exceed $20K: For example if you purchase a work ute for $30K, then the whole $30K reverts to the current tax incentive. Only goods acquired under $20K can be used as a deduction upfront.
Make sure you can afford the repayments: If financing the new vehicle or equipment, make sure your businesses cash flow can support the additional repayment.
Speak with an accountant or qualified tax agent: Find out if the goods you are purchasing or financing will qualify under the scheme. New and used goods are ok.
You have time: The scheme is running until the end of June 2017 so you have plenty of time to carefully consider your business purchases.
Only Small Businesses Qualify: All those so called experts advising that you just need an ABN to claim the tax break are wrong. At the very least the ATO will expect to see evidence of real business activity.
Mr Smith said that just because the government was providing an incentive scheme to business owners and contractors didn’t give the green light to make wild purchases without considering the consequences.
Westwide Building Maintenance Owner Michael Gardiner recently financed a work ute for his business through Mr Smith.
“The $20K Small Business Benefit accelerated my decision to purchase a ute sooner rather than later,” said Mr Gardiner.
“The Tradies I have spoken with since the scheme was announced are now more likely to invest in their businesses.”
“They’re looking at adding a new vehicle to their fleet or purchasing a new piece of equipment to gain a new contract,” he said.
Mr Smith runs Finance for Tradies in Perth, specialising in Vehicle and Equipment Finance.
More information about getting a better finance deal is available at www.financefortradies.com.au