TEMPORAY INVESTMENT ALLOWANCE FOR BUSINESS
(Care this legislation has not yet been passes by the Australian Government)
The tax initiative will be available to small business (annual turnover of $2m or less) for purchasing eligible assets of $1,000 or more. Other business can receive the same deductions for eligible assets with a cost greater than $10,000. The extra tax deduction is NOT available to small businesses entities or STS taxpayers that claim their depreciation deductions using the general STS pool or long life STS pool.
Eligible Assets are, All new tangible assets, and,
New expenditure on existing assets used in carrying on a business, whit the exception of the following.
- Land;
-Trading stock;
-Intangibles and rights;
-Computer software (as purchase is a right to use software);
-Capital works such as adding a new building, a room, a garage, patio, decking, gazebo, sealed driveway, retaining wall, fence, adding or removing internal walls, etc.
The threshold test ($1,000 or $10,000) must be met on a per asset basis – e.g. 10 computers costing $950 will not qualify despite total cost exceeding the threshold) after GST has been deducted from purchase price. The asset must also be NEW and this would seem to disallow demonstration assets (e.g. demonstration vehicle) being sold or leased acquiring the additional tax break. An asset purchased by HP is an asset owned by the entity.
Important Dates that affect rate.
|
Year
|
Acquired after |
Acquired before end of |
Installed before end of |
|
Additional 30% deduction |
13/12/2008 |
30/06/2009 |
30/06/2010 |
|
Additional 10% deduction |
1/07/2009 |
31/12/2009 |
31/12/2010 |
Example
If you acquired and installed an eligible asset on 1 March 2009 which had a cost base of $20,000 that is fully used for a taxable purpose with an effective life of 5 years – the depreciation would be:-
|
Year |
Standard Depreciation 20% |
Additional Depreciation |
Total claimable Deprecation |
|
1st - (122 days) |
1,337 |
6,000 |
7,337 |
|
2nd |
4,000 |
4,000 | |
|
3rd |
4,000 |
4,000 | |
|
4th |
4,000 |
4,000 | |
|
5th |
4,000 |
4,000 | |
|
Final year |
2,663 |
2,663 | |
|
Total |
20,000 |
6,000 |
26,000 |
For further information or questions on individual cases please contact our offices and we will be able to assist you.