This article is sponsored content brought to you by BOQ Specialist.
With the end of the financial year fast approaching, getting your finances in shape will be top of mind for busy practitioners. To make this as smooth as possible, BOQ Specialist helps identify key ways to turn business challenges into opportunities
Having worked closely with dental professionals for more than 25 years, BOQ Specialist understands that managing your finances, while continuing to run your practice and care for patients, can be a difficult task. To help make the lead-up to 30 June as smooth as possible, they have identified a few ways to turn these challenges into opportunities.
“If you’re a small business owner, June is the perfect time to examine your equipment needs,” says Nicole Mortimer, Head of Commercial Products at BOQ Specialist. “This is not only to ensure that your business retains a competitive edge and continues to grow, but also allows you to make the most of the current tax deductions available to you.”
Now is the time to take advantage of the $20,000 instant asset write-off. “Small business owners can write off eligible assets that cost less than $20,000 each before the end of the financial year,” says Nicole.
“This means that if you’re a dentist with a turnover of less than $10 million and you purchase an asset that is used for business purposes, you can claim it as an immediate tax deduction.”
This could improve the cash flow of your business, providing a lift in activity and investment for the new financial year. “This tax advantage is a simple and efficient way to boost the health of your business”, says Nicole, “so it is important to investigate whether your assets are eligible for the deduction before 30 June.”
This is a good time of the year to be speaking to equipment suppliers with regards to end of financial year promotion.
“The tax break combined with the lower cost options minimises the impact on cash outflows,” says Nicole. More good news is that the Federal Treasurer Scott Morrison opted in the May 2018 Budget to extend the popular tax concession for another year.
“We were expecting dentists to be under pressure to take advantage of the $20,000 instant write-off but now that it’s been extended to 30 June 2019, it creates a bit of relaxation for everyone,” says Nicole. “The continuation of this tax break is a positive outcome for small business owners.”
There are a number of different ways to finance new equipment. The right one for you depends on the stage of your career, the type of practice you have, and how you currently structure your finances.
“A chattel mortgage has become quite a popular choice when it comes to purchasing equipment,” explains Nicole.
With this loan type, you take legal ownership of the equipment from the time of purchase for tax purposes but your financier has a ‘mortgage’ over it until the loan is repaid in full over an agreed contract period. You may be able to claim the tax deduction for the usage of the asset.
If GST applies to the purchase of the equipment, you may be able to claim an input tax credit for the GST on the purchase price. “This can help you to better manage your cash flow and tax budgetary requirements,” says Nicole, “but make sure you talk to your financial adviser or accountant about what is best for your individual situation.”
Under a lease agreement, your financier owns and rents the equipment to you, and your payments are split into a number of monthly lease payments and a residual.
While you have the right to use the equipment for the period of the lease, you won’t have legal ownership until the residual is paid. You will also be responsible for the running costs and residual risk of the equipment.
“With a lease agreement, the monthly payments may be partly or fully tax deductible depending on your circumstance,” says Nicole.
Whether you have a chattel mortgage that you’re paying back, or some other kind of commercial loan—for example, maybe you borrowed money to purchase a practice—now is the time to revisit any interest payments you might be making.
“Practitioners have the opportunity to prepay the interest on interest-only fixed-rate loans for the next 12 months and claim a tax deduction in the current financial year,” says Nicole.
Choosing the right equipment can be challenging but working out the best way to finance it doesn’t have to be. BOQ Specialist provides tailored services to dentists and provides an ongoing process of assessing and modernising your dental equipment. ≤
For more information, contact one of our financial specialists today on 1300 131 141 or visit boqspecialist.com.au.
Disclaimer: The credit provider is BOQ Specialist – a division of Bank of Queensland Limited ABN 32 009 656 740 AFSL and Australian Credit Licence no. 244616 (BOQ Specialist). Terms and conditions, fees and charges and lending and eligibility criteria apply. We reserve the right to cease offering these products at any time without notice. BOQ Specialist is not offering financial, tax or legal advice. You should obtain independent financial, tax and legal advice as appropriate. The information contained in this article (“Information”) is general in nature and has been provided in good faith, without taking into account your personal circumstances. While all reasonable care has been taken to ensure that the information is accurate and opinions fair and reasonable, no warranties in this regard are provided. We recommend that you obtain independent financial and tax advice before making any decisions.