Hi all
My partner and I both have full time jobs. However, he knows how to fix cars and that’s what he spends his spare time on. At the moment he is just working on our family’s cars so there is no money in it as it’s all done for free.
We are planning to build a new house soon with a big workshop/garage at the back of the block. It will probably cost us 20k to build the garage and probably another 10K to buy some of the equipment and tools.
We hope that soon after the house/garage is built he will hopefully be able to fix up cars and sell them in order to make some money and pay off the mortgage a bit quicker.
Do you think it would be worth getting an ABN so that once he starts making money fixing up cars we can actually claim the cost of building the garage and equipment on tax? Like I said above, it would probably cost us 30K to get the garage set up. In his spare time he could probably manage to fix 2 cars per year, so the income/profit would probably be around 10K a year.
Do you think it would be worth it?
Also, we live in a residential area. Do you think they would even allow us to get an ABN.
Look forward to your replies ?
Not_so_luckyAnyone?
Having an ABN is different to actually being registered for GST.
If you are registered for GST then you are required to lodge BAS statements every 3 months to the tax department and to also collect GST for the TAX department.
If you check the TAX website http://www.ato.gov.au a turnover of $75,000 or more a year is when you are required to have registration. When talking about claiming the costs of buildings GST only applies if you are selling the buildings and wish to claim the GST you paid while charging the buyer of the buildings for GST.Get some advise from an accountant on whether the buildings are assets and if the expenditure is classed as owners equity rather than as an expense.
An ABN number being registered for 2 years is handy is when you go to apply for a loan.
Also if you don't have an ABN number on your invoices the customer is by law required to hold 48.5% of your payment for the tax department.
What you need to decide is are you a Sole Proprietor, Partnership or Company.
As a Sole Proprietor you need to record your income and expenses for calculating a Profit and Loss Statement for Tax Purposes at tax time (end of financial year) I use MYOB to do this.
I am running a small business and have an ABN number but it is not registered.
see
http://www.ato.gov.au/corporate/content.asp?doc=/Content/50568.htmThanks duckster
Re: When talking about claiming the costs of buildings GST only applies if you are selling the buildings and wish to claim the GST you paid while charging the buyer of the buildings for GST.
We dont actually intend to sell the garage, we just plan to use it for earning some money, definitivelly not more than $75,000 thought :S
Does this mean that we cant claim the garage expenses?Any business should have an ABN. GST is required if your turnover is more than $75k pa.
if you are conducting a business then you should be able to claim costs incurred including the cost of the building – depreciation. But beware in claiming this as you will lose your CGT exemption for this part of your property – you will probably lose it even if you don't claim the space as being used for your business. You could also claim part of your mortgage interest and rates, electricity, water etc.
It may be a good idea to look at setting up a company. This is helpful as it clearly separates the business from the personal and helps if your business is sued.
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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