As we have all heard, there are several stimulus measures in the economy at the moment. The following article refers to a 30 per cent tax deduction for small businesses introduced by the Federal Government. The intention is to provide a reason to invest now rather than later. Please do not construe this article as tax advice and speak to your accountant or financial adviser before deciding on a purchase.
OWNERS of small businesses will gain a special tax break if they buy new equipment ranging from computers and fax machines to cars and industrial machinery before the end of the financial year.
As part of its latest economic stimulus package, the Federal Government is offering small businesses a tax deduction of 30 per cent of the cost of new capital equipment worth more than $1000 so long as it is bought by June 30 and installed before the year's end.
The Government gave the examples of a business buying a $20 00 computer, which would attract a $600 deduction against its tax liability, and a firm buying a $60,0 00 backhoe, which would gain an $18,0 00 deduction.
The tax deduction will be available for any business with a turnover of $2 million a year or less. It will fall to 10 per cent for equipment bought from July until the end of December for installation by the end of 2010 .
Bigger businesses will be eligible for the same tax deductions but will have to spend at least $10 ,000 on new equipment to qualify.
The Treasurer, Wayne Swan, said the tax break would help businesses increase their investment spending, which would bolster economic activity and support jobs.
"Businesses in Australia, especially small businesses, are the engine of the Australian economy and deserve direct support during a global recession," Mr Swan said.
The Government expects the tax break, which will come on top of existing deductions to business for depreciation of capital equipment, will cost it $2.7 million in foregone revenue over the next three financial years.
