Calculating tax deductions In Australia the financial year is 1 st July to 30 th June. Depreciation of certain items are tax deductible, eg job related.

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Presentation transcript:

Calculating tax deductions In Australia the financial year is 1 st July to 30 th June. Depreciation of certain items are tax deductible, eg job related computers, investment properties etc. If an item is purchased during the year it can only be depreciated for the portion of the financial year that you own it. For example a printer buys a printing press on 1 st October, they can only claim 9 / 12 of the allowable deduction this year.

Example 1 Lara purchases a laptop on 31/1/05 for $2100. She uses the declining balance method and a rate of 30% to depreciate her computer. a) How much depreciation can Lara claim in the 04/05 financial year? b) How much depreciation can Lara claim in the 05/06 financial year? a) If purchased on 31/1/05 Lara can claim 5 / 12 of the year. Depreciation during 04/05 5 / 12 × 2100 × 0·3 = $262·50 b) Value at the beginning of 05/06 is: 2100  262·50 = Depreciation during 05/ ·50 × 0·3 = $1837·50 $551·25

Today’s work Exercise 9E page 275 Q1 to 6