Mix business with pleasure

If you’re a small business and can claim the cost of a caravan or camper trailer worth less than $20,000 the Federal Government has given a new incentive to do so in the May budget.

Treasurer Joe Hockey announced a temporary increase to the tax-write-off cap from $1000 to less than $20,000.

Small businesses can claim deductions for sub-$20,000 purchases between May 12  (budget night) and June 30, 2017, instead of claiming purchases of $1000 or more as deductions over several years.

The Federal Government has allocated $1.75 billion to fund the scheme, provided it is enacted to become law.

The $20,000 tax break applies to businesses that can demonstrate ongoing activity via quarterly Business Activity Statements.

Like most tax deductions, it isn’t a dollar-for-a-dollar arrangement. Typically you’ll get back 30 cents in the dollar back on the write-off in tax credits.

The incentive is not a free ride either. If you were a small business that could not claim a caravan or camper purchase before the incentive, you’re not automatically free to do so now.

There are plenty of small businesses likely to be able to claim a caravan or camper trailer deduction. These include those who travel for their work and could claim accommodation or a mobile office, such as travelling salespeople, photographers, casual mine-work staff, and those whose businesses can use the camper or caravan as a promotional tool with sign-writing and so on.

The sub-$20k purchase can be new or used -- provided you can prove business use and have a receipt. The GST component, if any, is not included.

With up to $19,999 to spend, you can buy a camper-trailer from a large number of manufacturers, anything from a soft-floor camper-trailer like the Silver Star Trekmaster 6 at $2999 to a hard-shell camper like the A’van Weekender at $19,990.

We’ve already seen one local manufacturer, Queensland-based Gidget Campers, advertise the fact that one of their retro-style pod campers could be eligible under the scheme, with the company claiming many of the vans they sell are to commercial operators such as photographers.

While others, like Jayco with its Grill Pod and Nova with its Workabout caravan, highlight the possibilities of turning a leisure-oriented RV into a money-making venture.

No new caravans are priced less than $20,000, but you should be able to pick up a used 1990s-era 20 to 24-foot caravan for less than $20k. You would be able to buy a van with air-con, and for families, a four-berth, but a shower/toilet would be more expensive.

Be warned that the ATO will be monitoring returns with the new deductions, and with a camper or caravan there’s a risk that it could be seen as a purchase intended for private use — even if only partially so.

Like anything to do with tax deductions, your best bet is to talk to your accountant before going on a buying spree.

If the value of the pool is below $20,000, until the end of June 2017 that pool can be immediately deducted too.

In addition to the instant asset write-off, companies with annual turnover of less than $2 million will have their tax rate lowered, from 30 per cent to 28.5 per cent.

Unincorporated businesses, such as sole traders, partnerships and trusts, will also get a five per cent tax discount from July 1 up to $1000 a year.

Any assets costing $20,000 or more can be added together and depreciated at the same rate. These assets are depreciated at 15 per cent in the first income year, and 30 per cent per year thereafter.