Alliance Equipment Finance explains Investment Allowance and how it works.
What is it?
The Investment Allowance is a temporary tax break available to Australian businesses. It applies to most plant and equipment you buy to operate your business.
The tax break is not a refund, rebate or tax offset. It's a tax deduction to reduce the assessable income of your business. Deadlines do apply though so it is important that you act now.
50% tax break for businesses with less than $2 million turnover.
Small businesses who turnover less than $2 million a year, you can claim an extra 50% tax deduction on the cost of eligible assets which cost $1,000 or more. This has been increased from the original 30%.
For small business to qualify you must have purchased the asset between 13th December 2008 and 31st December 2009. The asset must also be installed prior to 31st December 2010.
30% or 10% tax break for businesses with turnover of $2 million or more.
Larger businesses whose turnover is greater than $2 million still benefit from the Investment Allowance. For larger businesses the minimum asset cost is greater at $10,000 or more.
To qualify for the 30% tax deduction, the asset had to have been bought between 13th December 2008 and 30th June 2009. The asset must also be installed prior to 30th June 2010.
The 10% tax deduction still applies for large business until 31st December 2009. Once again, the asset must be installed and in use by 31st December 2010.