50% Deduction for capital purchases

In last night’s Federal budget, the treasurer announced an increase in the investment allowance deduction for small business. The increase to 50% applies to companies turning over less than $2m and for larger companies, the previously announced 30% and 10% deductions continue to apply.

What is the Tax Break?

A once off ‘bonus’ deduction will be allowed for tangible depreciating assets used in the running of a business. The tax break is offered on new assets and new expenditure on existing assets and is in addition to other deductions, such as depreciation. Additionally, the deduction does not impact the written down value of the asset.

Who qualifies for it?

• All business to some extent, when purchasing tangible assets.
• Businesses with annual turnover of less than $2m can claim a 50% deduction for the purchase of assets greater than $1,000 which are ordered between 13 December 2008 and 31 December 2009, so long as they are installed by the end of 2010.
• Business with annual turnover greater than $2m can claim a 30% deduction on assets over $10,000, ordered between 13 December 2008 and 30 June 2009, so long as they are installed by 30 June 2010.

Are there any deadlines I should know about?

If the time frames above are not achieved, then instead of the 50% or 30% bonus, a 10% bonus deduction is available for equipment , acquired, ordered or construction started between 1 July 2009 and the end of December 2009, and provided the goods are installed ready for use by the end of December 2010.

How do I get more information?

Reply to this email requesting more information or call us on 1300 859 429.