Small Business Tax Break increased to 50%

14th May, 2009

Eligible assets acquired between 13 December 2008 and 31 December 2009
As part of previous fiscal stimulus packages, the Government had announced that small business (those with a turnover of less than $2million) would be able to claim a bonus tax deduction for the acquisition of eligible assets, in addition to the usual capital allowance deduction.

Initially set as a 10% bonus deduction, then 30%, the bonus has again been lifted to 50%.

To be an eligible asset for this bonus, the asset must:
- cost more than $1,000 (although substantially similar assets may be aggregated in order to reach this threshold)
- be purchased between 13 December 2008 and 31 December 2009
- be used or installed ready for use by 31 December 2010.

As an example of the benefit this provides, for a small business being conducted through a corporate structure, for every $1,000 of eligible asset acquired, the total tax deduction will be $1,500. A $1,500 tax deduction provides a tax saving of $450. Therefore the overall after tax cost of $1,000 acquisition would be $550.
The increase in the level of bonus deduction and extension of time, from 30 June 2009, for asset acquisition provides some relief for small business taxpayers who may have struggled to acquire these assets due to cash flow constraints.

For non-small business taxpayers, the minimum asset threshold to qualify for a bonus is $10,000 (subject to similar aggregation rules)

For further information see: Small Business Tax Break Benefits Designers news item on May 7.