Tax Savings announced
The Federal Government has just announced an Investment Allowance Package to assist Australian businesses during the current financial crisis.
As part of the package, there will be a one off tax deduction equal to 30% of the capital cost of eligible new equipment and motor vehicles with a cost of at least $10 000. This allowance is in addition to the standard depreciation claimed for such assets. The Package is intended to encourage businesses to upgrade equipment.
Assets eligible for the allowance are new tangible depreciating assets and new expenditure on existing assets used in carrying on a business for which a deduction is available under the core provisions of Division 40 (Capital Allowances) in the Income Tax Assessment Act 1997.
The $2.7 billion Business Tax Break is a key element of the Australian government’s $42 billion Nation Building and Jobs Plan to support up to 90,000 Australian jobs.
This temporary business tax break is especially intended to help small businesses increase economic activity and support jobs, for example:
- A small business that buys and installs a $2000 computer before the end of June 2009 can claim an additional $600 deduction in its 2008-09 tax return.
- A business that buys and takes possession of a $60,000 filling machine by the end of June 2009 can claim an additional $18,000 deduction in its 2008-09 tax return.
Small businesses can claim an additional 30% tax deduction for eligible assets costing $1000 or more that they acquire from 13 December 2008 to 30 June 2009, and install by 30 June 2010.
For eligible assets costing $1000 or more that they acquire from 1 July 2009 to 31 December 2009, they can claim an additional 10% deduction where they are installed by 31 December 2010.
To benefit from this tax break a small business must have a turnover of $2 million a year or less.
Other businesses can receive the same deductions for eligible assets greater than $10,000.
This makes it a perfect time to purchase that new Blast Chiller or upgrade the coldroom or processing equipment.
For further information about the Incentive Allowance Package, contact your accountant or www.ato.gov.au