Government Announcements
Investment allowance
12.12.2008
On 12 December 2008, the Treasurer announced the Government’s decision to introduce a 10% temporary investment allowance.
The investment allowance will be available for businesses which start to hold an asset under a contract entered into after 12.01 am AEDT 13 December 2008 and before the end of June 2009 or start to construct an asset between those times. To be eligible, an asset must be installed ready for use by the end of 30 June 2010.
Further details released include:
· the investment allowance will be confined to new assets and new expenditure on existing assets, used in Australia;
· the investment allowance will apply to tangible assets used in carrying on a business, for which a deduction is available under the core provisions of Div 40 ITAA 1997 (capital allowances) – specifically depreciating assets under sec 40-30 ITAA 1997 that qualify for capital allowances under Subdiv 40-B (except for intangibles and rights that would otherwise be included by sec 40-30(2), (5) and (6) ITAA 1997);
· cars will not be disqualified from the allowance merely because the 12% method is used;
· land and trading stock (which are excluded from the definition of depreciating assets) will not qualify for the investment allowance;
· capital works for which deductions are allowable under Div 43 ITAA 1997 will not qualify;
· a minimum expenditure threshold of $10,000 will apply. Where an asset is partly used for private or non-taxable purposes, only the portion that is used for a taxable purpose in carrying on a business will count toward meeting the threshold; and
· expenditures above the threshold which are capitalised into an existing asset as a second element of cost will also qualify for the investment allowance.
For the text of the Treasurer’s media release, click here.
