Getting all you can from tax incentives

The government’s 30% Investment Allowance has already been well received amongst the general business community. While you may be unsure of your immediate needs, it’s worth being aware of ways in which you’re able to capitalise on the tax deductions. For while the deadline is 30 June 2009, you can still reap considerable rewards.

First up, purchases need not necessarily be completed by the June 2009 deadline, but orders simply need to be placed by then with delivery and installation before 30 June 2010. This gives you considerable flexibility to qualify for the one-off tax deduction equal to an additional 30% of the capital cost on eligible new equipment and motor vehicles costing $10,000 or more.

As Mark O’Donoghue of Finlease suggests, “Let’s imagine you can anticipate a potential need for several pieces of equipment, but your current needs fall short of that. Then it’s important to at least place your order with the supplier now on the absolute understanding from the supplier that you may reduce that order after 30 June 2009. Then the final decision on how many pieces of equipment you require will be agreed upon prior to a predetermined absolute deadline.”

How much could you save? As an example, on a CNC milling machine worth $100,000 you’d receive a tax deduction of $30,000 additional to the $15,000 depreciation allowance you can already claim, adding up to a $45,000 tax deduction in the first year.

Naturally, you must do your own research or speak with your own advisers to find out the best course of action given your current business situation. However, various scenarios prepared by Finlease for various clients revealed that the tax savings could add up to many thousands of dollars.

Right now, interest rates are at 50-year lows and still falling, while new equipment and motor vehicles are being sold at bargain prices. So this stimulus means that now could be an opportune time for you to upgrade.

Given the urgency of making some hard decisions and finalising your order requirements, it may also be worthwhile speaking with a specialist business finance broker to accelerate the finance process. Companies like Finlease specialise in the needs of small-to-medium business and can help you secure the finance and meet the Investment Allowance deadline. So talk to your accountant, Finlease, or log on to www.ato.gov.au/taxprofessionals/content.asp?doc=/content/00175431.htm for detailed information.