| “A truth’s initial commotion is directly proportional to how deeply the lie was believed. It wasn't the world being round that agitated people, but that the world wasn't flat. When a well-packaged web of lies has been sold to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.” - Dresden James |
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BUSINESS INVESTMENT TAX BREAK IS HERE Even in uncertain economic times businesses need assets in order to operate and grow. If you are thinking about purchasing, replacing or improving your business assets you’re probably asking what the new tax breaks mean for your business. If your business is a small business, that is, it has an annual turnover of less than $2 million for the current and/or the previous income year, you may be eligible for an additional tax deduction of 50% of the cost of eligible depreciating assets you purchase between 13 December 2008 and 31 December 2009. The 50% tax break applies to eligible assets of $1,000 or more that are first used or installed ready for use by 31 December 2010. Eligible assets include new tangible depreciating assets – things like new computer hardware and business vehicles – and improvements to existing machinery and equipment. They don’t include second-hand goods, land, trading stock or software. All other businesses may be able to access an additional tax deduction of: • 30% for eligible assets purchased or ordered between 13 December 2008 and 30 June 2009 and first used or installed ready for use by 30 June 2010 • 10% for eligible assets purchased or ordered between 13 December 2008 and 30 June 2009 and first used or installed ready for use between 1 July 2010 and 31 December 2010, or • 10% for eligible assets purchased or ordered between 1 July 2009 and 31 December 2009 and first used or installed ready for use by 31 December 2010. To be eligible, these businesses need to spend $10,000 or more on qualifying assets, which include new plant and equipment but not second-hand goods, land, trading stock or software. Provided you meet all the eligibility criteria in the income year, your business can claim these deductions in the income tax return for the year the asset was first used or installed ready for use. So for small businesses, if the asset was a computer bought and installed in June this year and it cost $1,000 or more, you can claim the deduction in your 2008–09 tax return. Remember, the tax break is not a refund and can only be used to reduce your assessable income at the end of the year. For more information call the ATO business tax break info line on 1300 337 921 or visit www.ato.gov.au/businesses/ Example – Small Business (turnover of less than $2 million a year)... Maria is a small business owner with two clothing stores. On 7 June 2009 she purchases a computer for one of her shops and installs it. The computer costs $2,400 (excluding GST and the cost of software used on the computer). Maria will be able to claim an additional $1,200 tax deduction (50% of $2,400) in her 2008-09 income tax return for her business. After applying the 30% company tax rate (the rate which applies to her business), this 50% tax deduction would reduce the amount of tax Maria’s business would have to pay by $360. Maria is also able to claim a deduction for the decline in value of the computer. It is a good idea to speak to your tax adviser before planning any purchases to ensure your business and the asset qualifies. 
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