30% Investment Allowance
The Government has issued a new $4.7bn economic package to stimulate business investment and encourage capital expenditure.
As part of this the Government has introduced the following ‘capital investment allowances’ in relation to ‘depreciable assets’ (plant, equipment and motor vehicles) acquired between 13 December 2008 and 30 June 2009. To be eligible the assets must be ‘installed ready for use’ by 30 June 2010. This means:
- ‘Small businesses’ acquiring assets costing more then $1,000 will be allowed an additional tax deduction of 30 per cent of the assets’ cost; and
- Before preparing financial statements and income tax returns there are some issues that need to be addressed as a single asset might be subject to various depreciation treatments and may or may not be allowed the ‘investment allowance’ claim
These are some of the issues:
- The assets need to be ‘new’
- The ‘investment allowance’ is available where the depreciation claim is prepared under the depreciation provisions of Div 40 of the Income Tax Assessment Act 1997 (Cwlth)
- ‘Capital works’ do not qualify for the allowance (these claims are prepared according to Div 43 of the ITAA Act)
- The investment allowance is not ‘accounted for’ in the financial statements. It is a deduction which is claimed only in the tax return. Therefore, there will be a difference between accounting profit and taxable income
Note for car buyers
New cars and genuine demonstrator cars are eligible for the new investment allowance.
Ring (02) 4731-1405 A Grade Tax Accountants Penrith for your specific taxation and accounting needs.
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