Changes to the Investment Allowance from 1st July 2009
Thursday, July 2, 2009

If you are thinking about investing in your business in the next six months you need to know about changes to the Small Business and General Business Tax Break, also known as the Investment Allowance, that apply from 1^st July 2009. 

Business can still claim an additional tax deduction on the cost of NEW, TANGIBLE and DEPRECIATING assets for which a deduction is available under Subdivision 40-B of the ITAA 1997 and new investment in existing assets.  
 

Small business (turnover less than $2million) must invest a minimum of $1,000 on an individual asset in order to qualify for a 50% investment allowance on the cost of eligible assets acquired before 31^st DECEMBER 2009.
 

All other business (turnover greater than $2million) must reach a $10,000 threshold in order to qualify for a 10% investment allowance on the cost of eligible assets acquired before 31^st DECEMBER 2009 
 

In order to be eligible for the Investment Allowance, customers need to have signed a contract / provided a purchase order or the asset must have started to be constructed by 31^st DECEMBER 2009. 

To meet the investment threshold taxpayers can aggregate expenditure in the following ways:

AGGREGATION OF IDENTICAL ASSETS > allows taxpayers to aggregate the eligible spend on identical or substantially identical assets to meet the requisite investment threshold.

ASSETS FORMING PART OF A SET> the eligible spend on assets may also be aggregated if they form part of a set. Items may be regarded as a set if they are dependent on each other, marketed as a set, or designed and intended to be used together.
 

KEY DATES

Asset under contract or begun construction > 1st July 2009 - 31st December 2009

Installed and ready for use 31st December 2010
 

This is a "bonus" tax deduction, which applies in addition to any deductions for depreciation ordinarily applicable for the products purchased.
 

It is important to note this is subject to legislation being passed by parliament, though it is expected to pass unimpeded.  This is for information purposes only and businesses should seek their own taxation advice.