SMALL BUSINESS AND GENERAL
BUSINESS TAX BREAK
Small businesses
Small businesses can claim an additional 50% tax deduction for eligible assets costing $1,000 or more that they acquire from 13 December 2008 to 31 December 2009, and install by 31 December 2010.
This deduction is on top of the usual capital allowance deduction (i.e., depreciation) claimable for the asset in the taxpayer’s income tax return.
To benefit from this tax break a small business must have a turnover of $2 million a year or less.
Other businesses
Other businesses (turnover larger than M$2) can still receive a 10% deduction for eligible assets greater than $10,000 & purchase contract before 31 December 2009 & installed before 31 December 2010.
Which assets are eligible?
Assets eligible for the allowance are most new tangible depreciation assets and new expenditure on existing assets used in carrying on a business.
Land and trading stock are excluded from the definition of depreciating assets, and will not qualify for the deduction.
Example
A small business that buys and installs a $2,000 computer before the end of December 2009 can claim an additional $1000 deduction (i.e., 50%) in its 2009/10 tax return.
Financing
Care must be taken with financing as the date of a HP agreement will be the contract date but a chattel mortgage will not override the date of a pre 31 December contract to buy.