Small Business Tax Break Benefits Designers

7th May, 2009

In February, federal treasurer Wayne Swan announced the Small Business and General Business Tax Break. This initiative provides an additional $2.7 billion in temporary tax breaks to small and other businesses to boost investment.

This tax break is part of the Government's $42 billion Nation Building and Jobs Plan to support up to 90,000 Australian jobs.

The tax break allows for businesses to claim a bonus deduction of 30 per cent for assets acquired from 13 December 2008 to 30 June 2009, provided the asset is installed and ready for use before 30 June 2010.

Small businesses will be able to claim the deduction for eligible assets costing $1,000 or more. Other businesses can receive the same deductions for eligible assets costing $10,000 or more. The tax break will also be available at a reduced rate of 10 per cent for assets acquired from 1 July 2009 to 31 December 2009 and installed by 31 December 2010.

The tax break is very generous and provides a substantial benefit to businesses. AGDA Accountant, Brad Hodge puts the tax break into context for AGDA members:

‘In respect to AGDA members a typical design firm would purchase new items such as computers, printers, furniture and fittings and motor vehicles. All such items can be eligible for the investment allowance assuming the qualification criteria is met as defined in our Autumn 09 Newsletter.

One other point of interest is that items that are part of a set (ie dependent on each other), identical or substantially identical may be aggregated to reach the thresholds eg a unit of shelving costs $120 - if a small business requires 15 units of shelving then the aggregation ($1,800) will meet the required expenditure threshold.

Expenditure can also be carried forward where a taxpayer does not incur sufficient expenditure in a single year in relation to an individual asset, but subsequently incurs additional expenditure in relation to that same asset in a later year - for example, a small business may purchase an asset for $900 in the 2008/09 year and therefore cannot claim the investment allowance for that year. The taxpayer, who then say, upgrades the asset for a further cost of $500 in July 09, is now entitled to claim the investment allowance on $1,400 in the 2009/10 year. Unfortunately computer software is specifically excluded from the allowance'.

The investment allowance provides a significant opportunity for businesses to upgrade their operating assets with the help of the ATO. Further information about the Small Business and General Business Tax Break is available from the following web-sites:

http://www.treasurer.gov.au/DisplayDocs.aspx?doc=pressreleases/2009/013.htm&pageID=003&min=wms&Year=&DocType=0

http://www.treasury.gov.au/documents/1505/PDF/Small%20Business%20FAQ%202.pdf

http://www.treasurer.gov.au/DisplayDocs.aspx?doc=factsheets/2009/005.htm&pageID=011&min=wms&Year=&DocType=3