Computer Troubleshooters

EXAMPLE -
A small business buys and installs a $5,000 computer before the end of June 2009 can claim an additional $1,500 deduction (i.e. 30%) in its 2008/09 tax return.

EXAMPLE -
A small business decides to contract Computer Troubleshooters for it's 2009/2010 IT outsourcing contract for $500 a month. The $6,000 contract covering 12 months is signed and paid prior to end of June 2009. The business can claim the $6,000 deduction in its 2008/09 tax return.

For Small Businesses turning over less than $2
million a year, prepayment of the following years IT services is a great way of tax effectively managing your future IT costs and having a complex area of your business effectively outsourced to an expert.

A prepayment is not apportioned but allowed in full as a deduction in the year in which it is incurred, if all services in respect of the prepayment are provided with 13 months of incurring the expenditure.

Your Computer Troubleshooter can provide
prepayment of IT services using either a managed services contract or a block time services agreement.

A managed services contract has a defined service level and a monthly management component. This allows your network to be proactively managed and serviced like an outsourced IT department.
A block time services agreement is an agreement to provide a specifi
Home Computer Services
c number of hours of services at an agreed rate. This is a responsive contract where you use your Computer Troubleshooter as your service provider on a pay for service basis over the year. Generally this must be expended within the 12 month period.

For Small Businesses turning over less than $2 million a year, new tangible equipment investments of more than $1,000 are eligible for the tax rebate. Under the government's plan, businesses will be able to claim a bonus deduction of 30% for new eligible depreciable assets. The deduction is on top of the usual capital allowance deduction (i.e. depreciation).

To be eligible for the investment allowance,
businesses must:

Acquire or start to hold the equipment under a contract entered into between December 13 2008 and the end of June 2009 and;
Have it installed ready for use by the end of June 2010, the deduction will be in the income year when first used or installed ready for use.

It is an ideal time to upgrade hardware and networks as you get the 30% as an upfront rebate plus you get the normal depreciation benefi ts over time. If you embark on the full network upgrade project the full installation and configuration cost of the project can be capitalised and included in total project costs. However, new software costs are not eligible for the 30% Tax Break Deduction.

The Federal Government recently announced the
proposed introduction of an education rebate for
primary and secondary students.

EXAMPLE -
A small business has a fully depreciated server
which is five years old and expensive to maintain
with a high risk of failure.

It replaces the server with a new one purchased
and installed for $5,000 qualifying for the 30%
tax incentive (see Tip 1) and depreciates the
equipment on an ongoing basis.

EXAMPLE -
A family receives Family Tax Benefi t Part `A"
and have 2 children in school one in primary,
the other in secondary. They purchase a $2,000
home computer for use by the children and pay
$60 a month for ADSL. Total spending of $2,720
on IT for the students is incurred before end of
June 2009.

In their 2008/09 tax return they claim $750 for the
primary student and $1,500 for the secondary
student. This equates to a rebate of $375 plus
$750, so the rebate of $1,125 will be included in
their 2008/09 tax return.

Effectively gaining the $1,500 (30%) rebate, plus
depreciating the $5,000 over the life of the asset,
moving some expenses from cash to non-cash
and reducing business continuity risk.

Under the proposal, eligible tax payers will be able
to claim 50% for costs up to $750 for primary school students (i.e. a rebate of up to $375) and 50% for costs up to $1,500 for secondary school students (i.e. a rebate of up to $750).

To be eligible, the taxpayer must receive Family
Tax Benefit (`FTB') Part `A' or the child receives certain payments or allowances such as Youth Allowance, ABSTUDY or Disability Support Pension

Computer equipment and computer running costs
(such as internet service provider fees, laptops,
home computers, printers and stationery) used
by students can be claimed. Make sure you keep
receipts and tax invoice for inclusion for the claim.

Education Tax Refund

The depreciation rate on IT equipment is quite high due to their low expected life compared to many other depreciable assets.

For depreciating IT assets of over $1,000 the effective life is generally 4 years and 3 years for
laptop computers. In many cases you can claim an immediate deduction for a depreciating IT asset costing less than $1,000.

So while equipment may last beyond this point, you
may no longer have depreciation tax benefits.
So if you upgraded your IT equipment you could be
experiencing the benefi ts of the latest technology
tax effectively with lower downtime risk and
better running costs.

For more information talk to your local
Computer Troubleshooter - Your Trusted IT Advisor

Call 8503 7057 | www.ctsoakleigh.com.au

All advice contained in this communication is of a general nature and should not be relied on as a reliable source for Tax advice. The IT Tax Tips contained in this document were regarded as correct at the time of writing, changes to legislation or proposed legislation may alter these tips. We recommend you contact the Australia Tax Office or a certified tax consultant for advice for your personal or business situation.

EXAMPLE -
A small business turning over less than $2 million a year decides to develop an IT plan with it's tax advisor, they determine to bring forward a planned $10,000 total network upgrade and appoint Computer Troubleshooters as their outsourced IT department for next year for $6,000.

The business gains the $3,000 rebate, plus is able to reduce the 2008/09 tax liability by $6,000 by prepaying the managed services contract for 2009/10.

Giving the business a financial boost for 2008/09, but also having upgraded the IT infrastructure and outsourced the IT management they have reduced business continuity uncertainty and improved efficiency.

Often we wait until the end of the fi nancial year to
think about tax. This year, why not be proactive and
plan your tax outcomes in advance.

With specific Federal Government programs available this year that must be committed before July 1 2009, it is imperative that to take full advantage you begin to plan now.

Why not take advantage of tax incentives and
ensure your IT is up to speed.

Talk to your tax accountant and your Computer
Troubleshooter to find a tax effective IT plan for
your circumstances.

If you have used Computer Troubleshooters for
servicing a home computer that has been used for deriving income or managing tax affairs, a proportion of the amount may be claimed for deduction for tax purposes.

IT costs such as internet access, printer consumables (toner and paper), depreciation and computer security subscriptions maybe proportionally deductible in the same circumstance.

Like all personal tax deductions you would need to provide proof of the expense and verify the proportion of the cost that is deductible.

EXAMPLE -
A home user who uses their home computer for managing their tax and financial affairs has previously verified with their tax consultant that 30% of the costs associated with the computer are tax deductable.

The home user has used Computer Troubleshooters during the year and spent $300 in repairing the computer and has a tax invoice and receipt.

The owner can include the $300 in their computer
running expenses and gain a $90 deduction of
the costs (30%) in their 2008/09 tax return.