Written on the 2nd of December 2009 by Dan Fox, Fox Finance Group
Bonus Tax Breaks
Are you a small business and not sure if you qualify for the Temporary Allowance Tax Break when financing your new car?
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 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. (This means that you may be able to sign a purchase order before 31st December, 2009 for a new car or piece of machinery for your business but not actually have to pay for or finance it or have it delivered until sometime in 2010!).
What assets qualify?
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 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.
Deductions & Amounts
The size of the deduction 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 the end of 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 the end of 2010.
So, now is the time to purchase (and this means finance as well) any new business asset you have been considering for your business. Whether its a car or a new computer, sign the purchase order in the next month even if you don't get it till sometime in 2010.
If you need assistance with finance for your business assets, please call Fox Finance Group on 1300 665 906.
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.