Tax Profiles

Tax Profiles

Small businesses now 50% better off.

(Article Released 13th July, 2009)

Small business operators were big winners in the Federal budget announced 12 May. The proposed Investment Allowance has now been increased to 50% for businesses with a turnover of less than $2 Million annually. Importantly the deadline to take advantage of the allowance has been extended to the 31st December, 2009.

The best news is how much money small businesses can save. The 50% Investment Allowance means a one-off tax deductions equal to an additional 50% of the capital cost on eligible new or demonstrator equipment and motor vehicles costing as little as $1000 or more. They must be ordered by 31st December 2009, then delivered and installed by 31st December 2010, again a 6 month extension on the previous deadline. Major rebuilds and upgrades are also included.

As Mark O'Donoghue from Fidelity Finance Group comments, "This is a once in a lifetime opportunity, a massive 50% extra tax deduction with the luxury of a window in which to act. By December 2010 we would expect the economy to be rebouding, leaving the better positioned small businesses ready to capture the profit impetus as a result of the upswing."

How much could you save? As an example, on a piece of equipment worth $100,000 you could receive a tax deduction of $50,000 additional to the $15,000 depreciation allowance you can already claim. That adds up to a huge $65,000 tax deduction in the first year.

Since small business is the lifeblood of the country, so this government initiative will amount to a big boost with far reaching impact.

Larger businesses aren’t being left out with the current 30% Investment Allowance left unchanged, as long as they ordered the asset prior to 30 June 2009 deadline.

Naturally you must do your own research or speak with your own advisers to find out the best course of action given your current business situation. However, various scenarios prepared by Fidelity Finance Group for various clients revealed that the tax savings could add up to many thousands of dollars.

Right now, interest rates are low, while new equipment and motor vehicles are being sold at bargain prices. So this stimulus means that now could be an opportune time for you to upgrade.

Given the urgency of making some hard decisions and finalising orders, it may also be worthwhile speaking with a specialist business finance broker to accelerate the finance process. Companies like Fidelity Finance Group specialise in the needs of small to medium business and can help you secure the finance and meet the Investment Allowance deadline. So talk to your accountant or Fidelity Finance Group, or see the details as laid out in the budget click here to visit the budget. 

Investment Allowance in a Nutshell:

For entities with a turnover of less than $2mil p/a:-

  • Investment allowance NOW is 50%
  • Goods need to be ordered by the 31st December 2009
  • Goods need to be delivered by the 31st December 2010

For entities with a turnover greater than $2mil p/a:-

  • Investment allowance remains at 30%
  • Goods needed to be ordered by the 30th June, 2009
  • Goods need to be delivered by the 30th June, 2010

N.B. For entities with a turnover greater than $2mil p/a a lesser 10% allowance is available if the 30 June 2009 order deadline was missed.

To view the Investment Allowance FAQ's click here.

ACT NOW! Don’t miss the deadline, call Fidelity Finance Group the Investment Allowance Equipment Finance Specialists for further information on +61 (2) 9212 0799

Tax Overview Characteristics Chart

Characteristics Lease CHP Chattel Mortgage
Are repayments tax deductible?* Yes No No
Can you depreciate the equipment as tax deductible?* No Yes Yes
Is the interest tax deductible? No Yes Yes
Is GST payable on the cost of the equipment? No Yes Yes
Is GST payable on repayments? Yes No No

* If used for income producing purposes.

N.B. Information contained on this page does not take into account your specific circumstances. You should seek confirmation from your accountant.

Contact Us:
+61 (2) 9212 0799

Apply Now