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Instant Asset write off

Newbie

Views 122

Replies 3

Hi,

 

I am a sole trader and I have purchased a vehicle for $51,000 that I use 80% of the time in my business.

 

My question is does it matter if all my income as a contractor comes from the one client. Does the PSI ruling or test have anything to do with claiming the insatnt asset write off. Do I need to pass the Results Test or 80/20 rule to claim 100% of the purchase for the year if the vehicle is used in my business to earn the income.

 

Thank you

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Most helpful response

Devotee

Replies 0

Have a read of https://www.ato.gov.au/business/starting-your-own-business/before-you-get-started/are-you-in-busines...

 

I can only tell you from experience that many people think they are running a business because they invoice their customer, when in fact they are not.

 

If you want a definitive answer, I can only suggest you either get a private ruling from the ATO, or make an appointment to see an accountant.

3 REPLIES 3

Devotee

Replies 2

Potentially does, having an ABN does not mean you are running a business. There is no one definition of a "business" unfortunately, but I would consider someone who fails the PSI tests is not running a business.

Newbie

Replies 1

Hi Devotee,

The vehicle is used for me to earn an income so how is that not claimable as an instant Asset write off, i looked up the definition of small buisness entity  and it states if you carry on a business. The definition of business in the Income Tax act is below.  Based on that definition I am a buisness for the instant asset write off.  It does not say I need to pass the results test or 80/20 Rule. 

Can you please provide a link or something from the ATO where it says I would have to pass the results test in order to claim the Insatnt Asset Write off. I thought the PSI test was related to how I treat my income for tax if I use equipment in order for me to earn an income in my buisness why wouldnt that come under this scheme?

 

(1)  You are a small business entity for an income year (the current year ) if:

                     (a)  you carry on a * business in the current year; and

Under the definition of “Business” under the income tax assessment Act 1997

business" includes any profession, trade, employment, vocation or calling, but does not include occupation as an employee.

Most helpful response

Devotee

Replies 0

Have a read of https://www.ato.gov.au/business/starting-your-own-business/before-you-get-started/are-you-in-busines...

 

I can only tell you from experience that many people think they are running a business because they invoice their customer, when in fact they are not.

 

If you want a definitive answer, I can only suggest you either get a private ruling from the ATO, or make an appointment to see an accountant.