Businesses can now invest with certaintyDOWNLOAD
The investment allowance announced by the Government in the Budget last week has passed the Senate and businesses are now able to claim an additional income tax deduction for new capital assets and expenditure on existing assets.
The Federal Budget announcement to inject $141m to expand the small business and general business tax break has been welcomed by Deloitte Tax Partner David Pring.
For businesses with a turnover of less than $2m, this measure is an additional 50% deduction for eligible assets over $1,000.
For businesses with turnover of more than $2m, the investment allowance provides two deduction streams of 30% or 10% for eligible assets of more than $10,000, depending on when the investment was made.
“Businesses have been holding off on new investments in capital assets until there was certainty that the rules would be passed by Parliament. They can now invest with certainty that the investment allowance will be available,” Mr Pring said.
“Businesses can now invest knowing what their tax position will be. They’re likely to consider their investment decisions as a trade off between conserving cash, the need for new productive capacity and obtaining the investment allowance,” Mr Pring said. “The investment allowance provides businesses with the equivalent of between 9% and 23% of the purchase price of new assets, depending on their size and marginal tax rate.”