Setting up Graphic Design Business - Instant Asset Write off for New Businesses with Little-to-No Turnover?

Flying Ace on 09/06/2020 - 13:51
Last edited 09/06/2020 - 14:01 by 1 other user

I've been doing a few graphic design jobs for friends and family over the last few years, but I'm getting more enquiries externally from other businesses so need to set up my business properly.

I'm a little unsure of the Instant Asset Write Off for small businesses and how it would apply to myself who would have little-to-no income starting out but does require new equipment (new computer).

Can I still utilise the instant asset write off and would it actually be useful to me?

I have a meeting with an accountant tomorrow, but just would like some idea.

Thanks!

• 

  Smulder on 09/06/2020 - 16:00

  +1

  If you are running the business under your personal name, and the business makes a loss, you will need to meet the non-commercial loss provisions in order to claim the loss against your other income.

  If you don't meet the non-commercial loss provisions (which it sounds like you won't), there is no real benefit of having a big instant-asset write off creating a big business loss. It will just be carried forward until you make a profit in the future.

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    netjock on 09/06/2020 - 16:52

    This is right.

    Simply put. If you have $40k of revenue and you buy an asset for $100k. You get a $100k tax deduction but the tax deduction for the $60k above profits is a carry over to future years when you might have a profit to offset.

    • 

      Bargain80 on 09/06/2020 - 17:16

      Question,
      is there a maximum number of years the tax deduction can be carried over?

      • 

        Smulder on 09/06/2020 - 21:00

        It's not the deduction being carried over, it is the business loss. There is no time limit on how long you can defer your losses.

        Having said that, the deferred loss can only be used against income from the same business activity, or one similar. In reality, how many years are you going to keep making a loss on a business activity before you give up? Most deferred non-commercial losses are never used.

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  [Deactivated] on 09/06/2020 - 16:51

  +1

  The weekend designer, we meet again

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    Flying Ace on 09/06/2020 - 20:09

    Actually fully qualified and doing it as my main job but in-house for a boss, but thanks for your input internet stranger :-)

    • 

      Some Guy on 09/06/2020 - 21:56

      Ah, The Lunch Cutter, we meet again