Contact: Melinda Loew
Deloitte
Media & Communications Manager
+61 (0) 2 9322 7146

Contact: Joe Niven
Deloitte
Partner
+61 (0) 2 9322 7991

The increase in rate of declining balance depreciation from 150% of the straight line rate to 200% will assist investment in Australia’s energy and resource industries, according to Deloitte Asia-Pacific Energy & Resources Partner Joe Niven.

“The net present value benefit of this change to the tax allowances for depreciation on new plant and equipment should assist investment in additional mining and infrastructure in Australia,” said Mr Niven

“The Warburton-Hendy report on international tax identified Australia’s tax depreciation regime as an area for reform and it is pleasing that this change has been adopted in this budget” said Mr Niven.

“Although the energy and resource sectors are currently benefiting from historically high commodity prices as well as demand for products, there are substantial global shortages and long lead times for purchases of new equipment across the sectors.  It is therefore pleasing that the Government has moved quickly after release of the report in this key component of the Australian economy.

“Benefits of the announced measure will also flow through to small and medium sized businesses that supply these sectors since new orders for equipment should lead to increased sales and profits, as well as continued high levels of employment,” Mr Niven said.