Investment Allowance Update

Posted on September 17, 2009

What is it?

The Investment Allowance is a temporary tax break available to Australian businesses. It applies to most plant and equipment you buy to operate your business.

The tax break is not a refund, rebate or tax offset. It's a tax deduction to reduce the assessable income of your business. Deadlines do apply though so it is important that you act now.

50% tax break for businesses with less than $2 million turnover.

Small businesses who turnover less than $2 million a year, you can claim an extra 50% tax deduction on the cost of eligible assets which cost $1,000 or more. This has been increased from the original 30%.

For small business to qualify you must have purchased the asset between 13th December 2008 and 31st December 2009. The asset must also be installed prior to 31st December 2010.

30% or 10% tax break for businesses with turnover of $2 million or more.

Larger businesses whose turnover is greater than $2 million still benefit from the Investment Allowance. For larger businesses the minimum asset cost is greater at $10,000 or more.

To qualify for the 30% tax deduction, the asset had to have been bought between 13th December 2008 and 30th June 2009. The asset must also be installed prior to 30th June 2010.

The 10% tax deduction still applies for large business until 31st December 2009. Once again, the asset must be installed and in use by 31st December 2010.

Eligible assets

For details on eligible assets please refer to the Australian Federal Governments website detailed below. It provides details on eligible assets as set out in Sec 40-25 of the Income Tax Assessment Act (ITAA 1997).

What next?

We suggest you speak to your tax adviser of accountant to discuss how the Investment Allowance can benefit you before making any decision or entering into any formal contracts to purchase.

If you are looking to take advantage of the Investment Allowance and would like to discuss your finance options with one of our Relationship Manager please contact us.

Still not sure?

If you would like to know more in detail the Australian Government have set up a website and a helpline.

www.australia.gov.au/businesstaxbreak

Australian Government info line: 1300 337 921

Disclaimer:

It is important that before you consider acting on this information you speak to your accountant or tax advisor for specific financial advice.