Does a Bigger Tax Deduction Make Financial Sense if You're Still Paying More?

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  Unorthodox on 29/12/2022 - 14:55

  +1

  So many variables….

  What tax bracket are you in? And how close are you to the below or above bracket?
  How much marginal benefit are you getting from starlink?
  Do you have the free cash flow for starlink or are you purely basing this off the tax deductible amount?
  Let's say you are on the top tax bracket, you are only really getting back $139 * 50% usage * 12

  Also read Q2 as an example for the set up costs: many new apartments, residences etc will require a set up for NBN and it's never been tax deductible.
  https://www.ato.gov.au/law/view/view.htm?docid=EV/1051424496….

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  avoidfullprice on 29/12/2022 - 15:22

  Haven’t read a word in your post, but my answer to your question is only if the net cost is lower.

  • 

    sangohan on 01/01/2023 - 00:10

    tax deductions do not reduce net cost - because if net cost is lower, you'd get lower tax deductions!

    The calculus is on whether the net value gained for the cost is better even with the higher cost. E.g., a car that could be used for personal gain, but can be construed as a business car.

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  Nugs on 29/12/2022 - 15:36

  +1

  a tax deduction is something that means you get back the tax already deducted on the money earnt to buy it.
  Scenario assuming you are a PAYG employee
  You are buying a product for an extra $100 per month, $1200 for the year.
  50/50 split means that $600 is tax deductible
  Lets say you earn somewhere in the $45-120k pa bracket
  Your tax rate is
  $5,092 plus 32.5 cents for each $1 over $45,000 (as taken from ATO site linked below)

  That extra $1200 you spent will actually cost 1200-(0.325x600)=1005

  ATO link for tax brackets
  https://www.ato.gov.au/rates/individual-income-tax-rates/?=t…
  .

  • 

    AnophthalmiaCervidae on 29/12/2022 - 15:47

    +2

    So you are still paying $83.75 of the $100 a month out of your own pocket.
    (It will be less if you are on a higher tax bracket)

    Tax deductible is not free, you still incur a cost, but the cost is reduced by the deductible amount.
    It is a question of whether the benefit to you is then worth this reduced cost.

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  bemybubble on 29/12/2022 - 17:07

  +6

  Here’s a simple life lesson

  Assume you can never claim anything on tax. Then make your decision. You’ll be thinking clearer I promise

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  Porker on 30/12/2022 - 22:51

  I tried to deduct my full internet bill but accountant said that it's unlikely to be accepted.

  Everyone has internet so you're likely to have it regardless of WFH, plus most plans are unlimited so not losing data by WFH.

  We dudceted a portion of the internet costs.