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Buyers not tempted by June 30 deadline

Buyers not tempted by June 30 deadline

June 2002 has been labelled "the month of bits and pieces" by IT dealers as a cautious attitude and new tax laws put a damper on end of financial year splurging.

Chris Elsworthy of Roshtech, a corporate dealer supplying enterprise, government and education, said companies "are not going open slather" as they have in previous years. "That kind of spending has been dying year-on-year".

Much of the slowdown is being blamed on the discontinuation of the one-off tax break, which deemed IT purchases as 100 per cent tax deductable. This was introduced by the ATO to ease the transition to GST in 1999 and 2000.

Now, however, rebates on IT goods are calculated on a depreciation basis of 40 per cent per year. "[Businesses] used to be able to claim the full depreciation in advance, now they only get depreciation and write-off for the period between June 30 and the date of purchase," said Elsworthy. He said this has done a lot to kill the sense of urgency associated with the June 30 deadline.

It may also prompt a reversal in spending patterns, according to Daryl McKeller of Agire, a Queensland-based dealer supplying government and corporate accounts. "We have a lot of clients putting in orders for July 1 which is kind of curious," he said.

McKeller said the change has nothing to do with people having less money to spend, although he admits that IT budgets have certainly been redrafted. "The money is out there but companies are being more realistic about their IT requirements rather than just spending topsy," he said. Much of this stems from the dot-com crash last year, according to McKeller. "Unfortunately the sky bloody did fall and came down with a thud". Vendors that had stocked up based on previous levels of sell-through flooded the market and consumers bought up big while the bargains were running hot.

Government spending has also been reined in by a new injection of accountability. Elsworthy said departments have to report back on expenditure, and in Queensland McKeller said the State Government's transition to a centralised model has tightened the purse strings significantly.

Regardless of the slowdown, McKeller is not sorry to see the crazed days of yesteryear disappear. "Previously guys were doing one-third of their total yearly business in one month, which is just crazy," he said. "[The current mode] brings the industry back to an even playing field. We can get back to a regular plateau of business."


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