As part of the Australian Government's Economic Stimulus Package, businesses purchasing New Equipment can claim a bonus tax deduction.

How could this work for you? 

Business Category	Claimable	Value (excl GST)	Commit to Investing (Ordered)	Start to Use or Have Installed Ready (Delivered)
(Small business) $2 million or less	50%	$1,000 or more	Between 13 December 2008 & 31 December 2009	By 31 December 2010
(Other Businesses) $2 million or more	30%	$10,000 or more	Between 13 December 2008 & 30 June 2009	By 30 June 2010
(Other Businesses) $2 million or more	10%	$10,000 or more	Between 13 December 2008 & 30 June 2009	Between 1 July 2010 & 31 December 2010
(Other Businesses) $2 million or more	10%	$10,000 or more	Between 1 July 2009 & 31 December 2009	By 31 December 2010

The deduction is claimable as part of your income tax return for the year in which the asset is installed ready for use.

A scenario of how this could work if delivered by 30 June 2010

Purchase Price New Trailer	$ 100,000.00
GST Rebate	$ 9,090.91
Balance after GST claimed	$90,909.09
50% Investment Allowance on post GST Purchase	$ 45,454.55
15% Depreciation on Post GST Purchase	$ 13,636.36
Total Claimable if delivered by 30th June 2010	$ 59,090.91
Therefore, tax saving this 30th June 2010
at Company Tax Rate of 30%	$17,727.27
GST Cash Refund	$ 9,090.91
Total Cash Advantage for 30th June 2010	$ 26,818.18
Net Cost of Trailer	$ 73,181.82

Note:  We are not professional tax advisers and recommend you seek professional advice regarding how the investment allowance pertains to you.


A light hearted take on the Australian Government's Investment Allowance


Click here to read more at the ATO Website