Australia Announces Business Tax Breaks

by Mary Swire, Tax-News.com, Hong Kong

05 February 2009

In a bid to support jobs and Australian businesses – especially small businesses – Australia's government has announced that it will fund an investment tax break for all of the country's businesses.

This temporary business tax break will help Australian businesses boost business investment, bolster economic activity and support Australian jobs.

The AUD2.7bn business tax break is a key element of the government's AUD42bn 'Nation Building and Jobs Plan' to support up to 90,000 Australian jobs.

The Small Business and General Business Tax Break will mean:

• A small business that buys and installs a AUD2,000 computer before the end of June 2009 can claim an additional AUD600 deduction in its 2008-09 tax return.
• A business that buys and takes possession of a AUD60,000 backhoe (mechanical digger) by the end of June 2009 can claim an additional AUD18,000 deduction in its 2008-09 tax return.

Small businesses can claim an additional 30% tax deduction for eligible assets costing AUD1,000 or more that they acquire from December 13, 2008, to June 30, 2009, and install by June 30, 2010.

For eligible assets costing AUD1,000 or more that they acquire from July 1, 2009 to December 31, 2009, they can claim an additional 10% deduction where they are installed by December 31, 2010.

To benefit from this tax break a small business must have a turnover of AUD2m a year or less.

Other businesses can receive the same deductions for eligible assets greater than AUD10,000.

Assets eligible for the allowance are new tangible depreciating assets and new expenditure on existing assets used in carrying on a business for which a deduction is available under the core provisions of Division 40 (Capital Allowances) in the Income Tax Assessment Act 1997.

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