In last week’s federal budget the government announced that it will increase the business tax break for assets purchased before the end of 2009 from 30% to 50%.
The tax break applies to all companies with an annual turnover of less than $2 million.
Under the new 50% tax break, a business will be able to claim a tax deduction of up to $15,000 (that is, 50% of $30,000) in the year of purchase.
The rebate is designed to stimulate the economy by encouraging small business to bring forward their capital equipment purchases.
Here’s an example of how a business could use the tax break, from the government’s budget papers:
Maria runs a retail clothing store and meets the definition of a small business entity. On 7 June 2009 she buys and installs six new mirrors for her fitting rooms. The mirrors cost $200 each and are substantially identical, so the cost of every mirror can be amalgamated for the purposes of meeting the $1000 threshold. Maria’s total investment is $1200 and she will be eligible to claim a $600 bonus deduction (being 50% of $1200) in her 2008-09 income tax return.
Budding netpreneurs and small business operators should take advantage of this scheme – if you need a new computer, office furniture or even a company vehicle, now is the time to buy. Speak to your accountant for further information.
