In 2009, the Federal Government’s Investment Allowance offered businesses a once-in-20 years opportunity.
So if you ordered a new vehicle or equipment last year, you’ll need to have it installed and ready for use by the relevant deadline this year to reap the rewards.
Mark O’Donoghue, principal of Finlease, points out: “You must fund your purchase in the right manner. Unfortunately come tax time, a few ill-advised companies may be disappointed to find that the finance structure they had chosen means that their Investment Allowance claim could be disallowed.”
Smart SME owners are thinking seriously about following through with their equipment purchases sooner rather than later to meet the anticipated demand for the products or services.
For businesses turning over less than $2million, there’s a 50% Investment Allowance if you’d placed your order by December 31 last year. The allowances apply to new and demonstrator vehicles and equipment, even major rebuilds of existing equipment. This is a one-off tax deduction on top of what you can already claim. You have until December 31 2010 to take delivery of the vehicle or equipment and have it installed ready for use.
Businesses turning over $2million and above have two deadlines to keep in mind. Orders placed before June 30 2009 qualify for the 30% Investment Allowance and they have until June 30 2010 to have the equipment installed and ready for use. Then for orders placed between July 1 and December 31 2009, the Investment Allowance is 10% and the final deadline for delivery and installation is December 31 2010.
If you’ve already paid cash for your equipment purchase, you may also like to consider a sale and refinance option. This can free up working capital for immediate needs and lets you spread repayments to optimise cashflow.
Find out more at www.australia.gov.au/businesstaxbreak