Small business and general business tax bonus

Detailed Information
Small businesses will be able to claim a bonus deduction of 30 per cent for eligible assets costing $1,000 or more that they :

  • acquire or start to hold under a contract entered into between 12:01am AEDT 13 December 2008 and the end of June 2009, or start to construct between these times; and
  • have installed ready for use by the end of June 2010.

Small businesses will be able to claim a bonus deduction of 10 per cent for eligible assets costing $1,000 or more that they :

  • acquire or start to hold under a contract entered into between 1 July 2009 and the end of December 2009, or start to construct between these times;
    and
  • have installed ready for use by the end of December 2010.
  • minimum expenditure threshold of $10,000 will still apply to all other businesses.

Eligible assets

The tax bonus will apply to tangible assets used in carrying on a business, for which a deduction is available under the core provisions of Division 40 (Capital Allowances) of the Income Tax Assessment Act 1997 (ITAA 1997).

Specifically, the deduction will be available for depreciating assets under section 40-30 that qualify for capital allowances under Subdivision 40-B, except for intangibles and rights that would otherwise be included by subsections 40-30(2), (5) and (6).

However, cars will not be disqualified from the allowance merely because they use the 12 per cent method.

Land and trading stock are excluded from the definition of depreciating assets, and will not qualify for the deduction.

Expenditures above the threshold which are capitalised into an existing asset as a second element of cost will also qualify for the deduction.

Claiming the tax bonus

The deduction will be available to the taxpayer who is entitled to the capital allowance deduction under Division 40 of ITAA97 in respect of the asset.

The deduction is on top of the usual capital allowance deduction claimable for the asset as part of the taxpayer’s income tax return.

The deduction will be able to be claimed based on the applicable rate (30 per cent or 10 per cent) and the asset’s first and/or second elements of cost in terms of Subdivision 40-C.

The deduction is claimable in the income year in which the asset is installed ready for use.

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