What are the end of year considerations around technology spend? Are there tax gains to be had by accelerating expenditure? How does Capital spend differ from Opex for tax deductions? What about end of year specials – are they right for you?
1. Maximise wear and tear deductions. Be aware of how quickly you depreciate your assets. The rate of wear and tear should match the useful life of your tech equipment. The tax office has allowable rates which may be advantageous to use. Discuss with your accountant and consider that they will need to maintain an asset depreciation schedule for each item.
2. Opex vs Capex. Consider switching to operational expenditure. It may be of greater benefit for you to switch from claiming the depreciation of capital investments to claiming operational expenditure in a rental style arrangement. Managed services and cloud computing solutions are 100% tax deductible and don’t require maintenance of an asset register.
3. Plan your tech spend. The end of financial year period is a good time to take stock of the past 12 months and also to plan your tech spend for the following year. Anticipate the hardware and software you will require and identify any forthcoming projects that will need to be included in your budget. Consider negotiating better pricing by locking in projects in advance.
4. Sale and leaseback. Assess your previous capital investments. Feeling locked in to equipment you have recently purchased and want to switch to rental? Discuss opportunities to sale and leaseback your existing equipment with your financier or consultant. Pocketing some cash whilst reducing spend makes sense at any time of year.
5. Take note of EOFY sales. If there’s something on your capital expenditure budget you need to buy, keep an eye out at the EOFY sales. You may want to approach your reseller about doing a deal and push for deeper discounts if you pay within 14 days. If you have missed the opportunity this side of year end, negotiate for similar discounts in the early part of next financial year. Completing the purchase now with similar discount levels may mean a full 12 months of tax deductions for next year.