Home – New Forums Money matters New computer – lease vs buy vs interest free

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  • #987395
    Imagine1
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    I am on the market for a new computer and looking at spending approx $1500. I am not registered as yet for GST but close. I made a profit for the first time last FY.

    If minimizing tax is my aim which option is the best; lease, buy or interest free?

    I find that they are always trying to convince me to lease because of the insurance component. This option would however be most expensive of the three. If I buy outright it will affect cash flow and then will have to be depreciated. Not sure how that affects my expenses. I presume if I do interest free the entire payment will be treated as an expense. Is this then the best option?

    Any help on this would be greatly appreciated.

    Thanks

    Elaine Martin
    MindOverMatter
    http://www.mindovermattertherapy.com.au

    #1162501
    affgar
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    Lease is best for taxation purposes I believe. I am no legal/accounting expert though.
    You can claim all the payments .. if product is used entirely for work.
    I always prefer to buy products outright though … You have greater bargaining power that way so can save money.
    Not sure how different interest free would be to leasing?
    Business leasing is setup for tax purposes & reducing cash flow burn.
    Also with leasing you often get equip upgraded as you go ie signing a new lease.

    #1162502
    Hatching_It
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    Make sure you look in to the small business depreciation rules. You can claim the 3 years depreciation in the first year if it meets the criteria

    http://www.ato.gov.au/business/small-business-entity-concessions/in-detail/income-tax/simplified-depreciation-rules/

    I claimed a couple of laptops, big monitors, A3 printer etc all upfront so it brought the cost down significantly.

    #1162503
    LucasArthur
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    Hatching_It, post: 187832 wrote:
    I claimed a couple of laptops, big monitors, A3 printer etc all upfront so it brought the cost down significantly.

    What are you compensating for.. LOL… oops, was that wrong?

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1162504
    Hatching_It
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    Lol Jason you are the worst at staying on topic!

    Much easier to use PhotoShop and write code on a big monitor..

    #1162505
    LucasArthur
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    Hatching_It, post: 187836 wrote:
    Lol Jason you are the worst at staying on topic!

    Ok, bowing out.. LOL..

    Talking about leasing v buying.. think it depends on your personal situation, i know people say leasing is good cos you write it off although you still have to pay more to be able to write it off.. sometimes the simple tax write down is more of an advantage…

    Turnover affects this.. your cash situation will affect your decision and so forth.. i personally DO NOT LEASE equipment, unless vehicle etc..

    Cheers
    Jason

    Jason Ramage | Lucas Arthur Pty Ltd | E: [email protected]   P: 61 3 8324 0344    M: 61 412 244 888
    #1162506
    affgar
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    HAHAHA …
    Funny man Jason! :D

    Big is the ‘new’ little didn’t you know.
    I agree .. I hate the idea of leasing products.

    #1162507
    Past-Member
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    I ‘rented’ once, and hated it as I had to remove everything at the end of the rental time before I was ready to onto a new computer. Since then, I have continued to purchase outright and depreciate over 3 years. (Except for the brief period where the government let us make any purchase up to $6K deductible. Now defunct. It’s back to purchases up to $1000 plus GST now.)

    Getting back to the topic, I choose to purchase because I prefer to ‘own’ my computers so that I can either give them away, or sell, when I am finished. I make sure everything is wiped and restored back to original first. A good way to help people or family you know who need to start somewhere and would appreciate a gift that is 2 or 3 years old.

    Something to note … if you were to purchase in April, you have virtually only 3 months use to claim depreciation for this financial year. So the deduction won’t be as much as in the next two financial years. Always check with your accountant or the ATO.

    Cheers.

    PS and don’t forget to add as much RAM as you can afford. At least 8G for office work. For graphics 16-32G.

    #1162508
    bluepenguin
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    When I started out and things were really tight, I leased a laptop and a big monitor, but if I did it over again I’d just save up and buy outright.

    If you go to a big chain store, they will try and sell you on the tax deductions, but they fail to mention that:

    1. The total of all your lease payments will be FAR more than the price on the item’s tag
    2. If you buy outright, you’ll get a much lower price and you’ll probably be able to talk them down a bit as well.
    3. If you go online, you’ll probably be able to get an even better price.

    In my adventures, even with the tax deductions, it would have been far cheaper to buy the stuff outright. It did mean that it all straight away though.

    The other thing to note, is that you’re going to have to make a payment every month for several years, which is just another thing buzzing around in your mind and reminding you that you belong to “the man”.

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