Temporary Investment Allowance Tax Breaks Explained
Please note: The Temporary Investment Allowance
is no longer available for asset purchases made
after 31 December 2009. This information is provided for reference
purposes only.
Additional tax breaks for your business
The Federal Government's Temporary Investment Allowance for
general business and small business - also known as the Small
Business and General Business Tax Break - is a temporary additional
tax deduction available to businesses when they purchase eligible
new assets, or invest new funds in existing assets. This
one-off deduction is in addition to the normal depreciation
deductions that businesses can claim.
The Temporary Investment Allowance ends
on 31 December, 2009. In order to take advantage of
this unique opportunity, businesses must commit to investing before
this date, and the asset(s) must then be used, or installed ready
for use, by the end of 2010.
Please note that the information on this page is of a
general nature only and is not intended as advice. You should
consult a registered tax agent to obtain information and advice
specific to your situation before making any decisions involving
the Temporary Investment Allowance.
Jump ahead:
What is the Temporary Investment Allowance?
The Temporary Investment Allowance was first announced in
December 2008 as part of the Federal Government's economic stimulus
package. It is an additional, one-off tax deduction available to
businesses for the purchase of new (and demonstrator) assets, as a
means of encouraging business investment.
These assets must meet minimum investment value thresholds
and investment deadlines to qualify for a deduction, with the
deductions available depending on the size of the business (as
defined by annual turnover) and the timing of the
investment. In order to be eligible for any part of the
Temporary Investment Allowance tax breaks, investment commitments
or purchases must be made no later than 31 December 2009.
The Temporary Investment Allowance is an additional tax
deduction, over and above the normal depreciation a business may
claim over the life of an asset. This means that the total tax
deductions over the life of assets eligible for the Temporary
Investment Allowance will be greater than 100% of the value of the
asset.
Eligible assets & minimum
investments
New, tangible, depreciating assets on which a business
would usually claim depreciation are eligible for the Temporary
Investment Allowance, as long as they meet the minimum investment
value thresholds.
Examples of eligible assets include new and demonstrator
vehicles (cars, trucks, etc), plant, business equipment, machinery
and computer hardware (but not software).
The minimum investment value threshold for small businesses
(less than $2 million annual turnover) is $1,000 excluding GST. For
other businesses (annual turnover of $2 million or more) the
minimum investment value threshold is $10,000 excluding GST. This
threshold is per item, although the values of groups of items that
are related, or form a set, may be counted together.
Deduction amounts & deadlines
The size of the deduction your business is eligible for and the
deadline for making an eligible asset investment depends on the
size of your business.
The maximum deduction of 50 per cent is available to small
businesses with less than $2 million annual turnover. Investments
in eligible assets, or contracts to purchase or construct these
assets, must be made between 13 December 2008 and
31 December 2009. Importantly, these assets must also be
installed and ready for use by 31 December 2010.
A 30 per cent deduction is available to other businesses (annual
turnover of $2 million or greater) that have invested in eligible
assets, or entered into a contract to purchase or construct
eligible assets, between 13 December 2008 and 30 June
2009. These assets must be installed and ready for use by
30 June 2010.
Finally, a 10 per cent deduction is available to other
businesses (annual turnover of $2 million or greater) that have
invested in eligible assets, or entered into a contract to purchase
or construct eligible assets, between 1 July 2009 and
31 December 2009. These assets must be installed and ready for
use by 31 December 2010.
Claiming the additional tax
deductions
The Temporary Investment Allowance additional tax deductions can
generally be claimed on your business's income tax return for the
income tax year that the eligible asset(s) were installed and ready
for use.
Small business essentials
A summary of the additional tax deductions available for small
businesses (less than $2 million annual turnover):
- Additional 50 per cent tax deduction available.
- Eligible assets must be new (including demonstrator), tangible
and depreciating.
- Commitment to invest must be made between 13 December 2008
and 31 December 2009.
- Eligible assets must cost $1,000 (excluding GST) or more.
- Eligible assets must be installed and ready for use by
31 December 2010.
Other business essentials
A summary of the additional tax deductions available for other
businesses (annual turnover of $2 million or more):
Phase 1 - ends 30 June 2009:
- Additional 30 per cent tax deduction available.
- Eligible assets must be new (including demonstrator), tangible
and depreciating.
- Commitment to invest must be made between 13 December 2008
and 30 June 2009.
- Eligible assets must cost $10,000 (excluding GST) or more.
- Eligible assets must be installed and ready for use by
30 June 2010.
Phase 2 - ends 31 December
2009:
- Additional 30 per cent tax deduction available.
- Eligible assets must be new (including demonstrator), tangible
and depreciating.
- Commitment to invest must be made between 1 July 2009 and
31 December 2009.
- Eligible assets must cost $10,000 (excluding GST) or more.
- Eligible assets must be installed and ready for use by
31 December 2010.
Choose your finance carefully
Choosing finance to conserve your cashflow and obtain the
vehicles and equipment you need to grow your business needn't be
difficult with the right advice. When it comes to the Temporary
Investment Allowance, the finance structure you use can determine
your eligibility for the additional tax deduction, as well as
influencing the required timing of payments and delivery - so you
need to choose your finance carefully.
Stratton Finance's experienced finance consultants will ask the
right questions before they give you the answers - helping you to
select the best structure and the best lender for your needs.
Keep your cash, expand your business with new cars and
equipment, and take advantage of the additional tax deductions
available on purchases made before 31 December 2009: call us
on 1300 STRATTON (1300 787 288), or enquire
online about car finance or business
equipment finance now.