Federal Government Announcement – 30% Tax Deduction on New Assets Investment

The Federal Government has announced that business can obtain a 30% investment allowance by way of a one off tax deduction.

To support jobs and Australian businesses – especially small businesses – the Government will fund an investment tax break for all Australian businesses.

This temporary business tax break will help Australian businesses boost business investment, bolster economic activity and support Australian jobs.

Businesses in Australia – especially small businesses – are the engine of the Australian economy and deserve direct support during a global recession.

This $2.7 billion Business Tax Break is a key element of the Government’s $42 billion Nation Building and Jobs Plan to support up to 90,000 Australian jobs.

The Small Business and General Business Tax Break will mean;

  • A small business that buys and installs a $2,000 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 backhoe 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 per cent tax deduction for eligible assets costing $1,000 or more that they acquire from 13 December 2008 to 30 June 2009, and install by 30 June 2010.

For eligible assets costing $1,000 or more that they acquire from 1 July 2009 to 31 December 2009, they can claim an additional 10 per cent 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 will further boost business investment and confidence in the Australian economy in the face of the global recession.

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.

More detailed information is attached. Treasury will also release draft legislation for public consultation.

CANBERRA
3 February 2009