BUDGET 09-10: Small businesses 50 pc better off
Small business operators were big winners in the May 12 Federal Budget, with the investment allowance raised to 50 percent
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<font color=red>BUDGET 09-10:</font> Small businesses 50 pc better off
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Small business operators were big winners in the May 12 Federal Budget, with the investment allowance raised to 50 percent for operators with a turnover of less than $2 million annually.
Importantly the deadline to take advantage of the allowance has been extended by six months.
According to Mark O’Donoghue, principal of finance broker Finlease, the best news is how much money small businesses can save.
The 50 percent investment allowance means a one-off tax deduction equal to an additional 50 percent of the capital cost on eligible new or demonstrator equipment and motor vehicles costing as little as $1,000 or more.
They must be ordered by December 31, 2009, and delivered and installed by December 31, 2010, a six-month extension on the previous deadline. Major rebuilds and upgrades are also included.
"This is a once-in-a-lifetime opportunity, a massive 50 percent extra tax deduction with the luxury of an eight-month window in which to act," he says.
"By December 2010 we would expect the economy to be rebounding, leaving the better-positioned small businesses ready to capture the profit impetus as a result of the upswing."
How much could you save? As an example, on a piece of equipment worth $100,000 you could receive a tax deduction of $50,000 additional to the $15,000 depreciation allowance you can already claim. That adds up to a $65,000 tax deduction in the first year.
Larger businesses aren’t left out, with the current 30 percent investment allowance left unchanged, including the June 30, 2009 deadline to order or make purchase decisions.
Various scenarios prepared by Finlease for clients reveal the tax savings could add up to many thousands of dollars.
Right now, interest rates are at a 50-year low, while new equipment and motor vehicles are being sold at bargain prices.
So this stimulus means that now could be an opportune time for businesses to upgrade, O’Donoghue says.
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