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So it’s time for a fit-out.

Whether you are fitting out any workplace, for example:
a new building, shop, warehouse, office refurbishment or
a “make good on lease exit”, how you fund the project can
have a significant impact on the liquidity and profitability of your business.

Traditionally business owners have used surplus capital expenditure to cover the cost of the project, but in today’s tight business market where cash flow is king, many savvy business operators are choosing to finance their fit-outs, maintaining critical ongoing cash flow for the business. 

From a tax perspective, paying with cash reserves will allow you to claim deductions in the way of depreciation. For assets funded under a loan, the deduction will depend on whether the fit-out is (1) financed or (2) leased, the two main methods of tax savings are: (1) depreciation of the projects assets over their usable life, and the interest component on the monthly finance repayments. (2) The whole lease repayment is a deduction.

Retaining cash for other future needs means the company’s annual financial statements won’t show a sizeable capital expenditure for non-core assets, yet a healthy bank balance is still visible in current assets. So depending on how your business is structured in terms of entity size, turnover, profitability, cash reserves and forecasted cash flow, it’s worth speaking with your Accountant to ensure you are investing wisely in this project with the best funding solutions available.

Naturally seek independent financial advice to suit your particular circumstances, in the knowledge you may now have a smarter option to cover your upcoming fit-out cost or short term make-good expenses.

For more information or an repayment estimate for your project contact Bud from AutoMates on 0414654164 or at budv@automates.com.au

 

 

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