 Small businesses will be able to access the tax break for assets costing AUD1,000 or more. For all other businesses, the asset threshold is AUD10,000. |
Government seems determined to boost capital investment by Australian businesses, with its latest announcement this month to increase the tax deduction on eligible assets from 10% to a whopping 30%.
It has also lowered the asset threshold for small businesses, from AUD10,000 to AUD1,000.
The original incentive, announced in December 2008 (
Forkliftaction.com News #395), was part of the government's AUD6.4 billion nation building package and provided for an additional tax deduction equal to 10% of the cost of an eligible asset.
This allowance would be applicable to most new tangible depreciating assets - which includes most items of plant and equipment - over AUD10, 000 which are acquired or ordered by the end of the current financial year.
The measure was estimated to cost AUD1.6 billion over the forward estimates period.
A month after it was announced,
Forkliftaction.com News reported that the forklift industry was not feeling any positive knock-on effect from the announcement.
This month's expanded offer provides an additional AUD2.7 billion temporary tax break to small and other businesses to boost business investment.
Small businesses will be able to access the tax break for assets costing AUD1,000 or more. For all other businesses, the asset threshold is AUD10,000.
The tax break provides an additional tax deduction for assets acquired from 13 December 2008 to 30 June 2009, where the asset is also installed before 30 June 2010. The deduction will be equal to 30% of the asset's cost.
For assets acquired between 1 July 2009 and 31 December 2009 and where they are installed ready for use before 31 December 2010, the deduction is 10% of the asset's cost.
Assets that are eligible will be tangible depreciating assets used in carrying on a business, for which a deduction is available under Division 40 of the ITAA97.
Further, the tax break will be available for new expenditure on existing assets as well as for new assets. The assets must be used in Australia.
Draft legislation to implement the investment allowance will be released for public consultation later this month.