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Small Business Tax Concessions on POS Systems

Small Business Tax Concessions on POS Systems
Category: Latest News
Posted: 01/07/2012 09:44:00
Comments: 0 [Post]
Synopsis: From 1 July 2012 new tax concessions designed for small business in regards to increased instant write-off threshold will come into effect.

From 1 July 2012 the depreciation rules for businesses with aggregated turnover of less than $2 million are changing. Aggregated turnover includes the annual turnover of the small business and the annual turnovers of any connected or affiliated businesses. ATO's Guide to Small Business Entity Concessions

Currently the rules allow for an immediate deduction for assets costing less than $1,000 each (net of GST). They also provide for the pooling of assets, with the pool to be depreciated at 30% for assets with an effective life of less than 25 years (15% in the first year, regardless of when they were acquired), and 5% for assets with an effective life of greater than 25 years (2.5% in the first year).

The new rules will now allow small businesses to:

  • claim an immediate deduction for assets costing less than $6,500 each (net of GST)
  • put all assets (regardless of effective life) will be consolidated into one pool written off at one rate

How does this benefit me when purchasing a POS System?

Before I provide a direct answer to that, lets have a look at the definition of a POS System.

Point of Sale System: A sophisticated, computerised, cash register system made up of computer related hardware and software. It may take the form of a single computer and POS Software with attached POS hardware eg. POS Printers, Cash Drawers, Barcode Scanners, Scales etc or it may comprise of hundreds of computerised POS terminals all connected covering a vast network and area.

When you receive a quote on a POS System you may well be quoted on the "sum of the parts" meaning you are quoted a single figure which covers the complete supply and implementation of the POS System. In actual fact, the "some of the parts" as far as tax depreciation is concerned can be broken down in three core component areas: POS Software, Labour (covering installing / programming / training / delivery etc) and POS Hardware.

POS Software and the Labour component have a 100% write-off within the same financial year as purchased. This is not new. What is new is the threshold for the immediate write-off on the POS Hardware component. This will be rising from $1,000 to $6,500 ex GST from 1 July 2012.

Example purchase of a POS System:

Say you purchase a POS System for $20,000.00 ex. GST and the three core components have the following purchase values:

  1. POS Software $10,000.00 ex. GST
  2. Labour $3,600.00 ex. GST
  3. POS Hardware $6,400.00 ex GST

In this case, the complete POS System would have a 100% write-off within the financial year of purchase.

I should point out that the above is an example of a component break down of a POS System and is not to say that every POS System supplied would have a break down as detailed. If the POS Hardware component had a greater value than $6,500.00 ex GST then a 100% write-off within the financial year of purchase would not apply. Although having said that, our example details "POS Hardware" as a single item; if "POS Hardware" was supplied as a number of separate pieces which would most likely be the case for a POS System, then it maybe possible to have a much greater overall POS hardware value and still achieve a 100% asset write-off.

Important note: The writer is not a qualified financial and or tax adviser. Feel free to to show this article to your accountant for a qualified opinion.

Further information: POS Systems or call (02) 9817-7791


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