Are you entitled to the NEW 30% Investment Allowance? Information You Must Know Now or You May Miss Out.
April 26th, 2009 adviceThe government is looking to boost business investment, bolster economic activity and support Australian jobs.
The Investment Allowance forms part of the government’s $42 billion stimulus package.
At the time of writing this the investment allowance legislation has not been passed yet so the following may change.
If you are a business with turnover of less than $2 million dollars and you spend $1,000 or more (or enter into a contract for $1,000 or more) on some new eligible equipment between 13/12/08 and 30/06/09 and it is reasonable to conclude that the asset will be used principally in Australia for the principal purpose (not apportioned for private use) of carrying on a business you can claim an additional 30% tax deduction in the business income tax return for the year ended 30 June 2009.
This is a 30% tax deduction not a tax rebate. For example, in a company, the tax you get back from spending $3,000 on new equipment is $270 ($3,000 x 30% x 30%) not $900 ($3,000 x 30%). This is a common misunderstanding.
The equipment must be new and you should normally be able to claim depreciation on the equipment. Land, intangibles and trading stock are specifically excluded. Cars that you claim the 12% method are included. More examples of ineligible equipment: intangibles such as computer software and intellectual property rights, cars using the cents per kilometer method, capital works such as building construction expenditure and earthworks also special deductions such as water facilities.
The expenditure can also be capital expenditure on existing assets.
If you acquire the asset between 1/7/2009 and 31/12/2009 and its installed and ready for use by 31/12/2010 you can claim an additional 10% tax deduction instead of the additional 30% tax deduction if you buy on or before 30/6/2009.
If the annual business turnover is greater than $2 million dollars then you must spend more than $10,000 on equipment to be eligible for the investment allowance.
More Detailed information
Copy of pending legislation and explanatory memorandum
http://parlinfo.aph.gov.au/parlInfo/search/display/display.w3p;query=Id%3A%22legislation%2Fbillhome%2Fr4094%22
http://www.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2009/013.htm&pageID=003&min=wms&Year=&DocType=0
Regards,
Glenn Wallace
Business Adviser
Chartered Accountant
CPA
Australian Registered Tax Agent
Superannuation
