| INVESTMENT ALLOWANCE WARNING |
Businesses beware. There are tax considerations related to how eligible equipment** purchases are financed under the federal government’s Investment Allowance scheme.
Ledge Finance is working with clients to ensure that their purchases are eligible for the full tax deduction, having noted differences in the way various finance products – hire purchase, lease, chattel mortgage, etc – are treated.
“The Small Business and General Business Tax Break legislation has gone through parliament and is now law, but as can happen, we are finding there is some devil in the detail,” says Noel Smith, Ledge’s Executive Director (Risk & Compliance).
“In this instance, companies need to be aware of the implications of how the difference finance products are treated tax-wise.
“We are finding situations where clients may be disadvantaged if they do not know the full implications of the product they want to use to finance the equipment.
“The issue is still ‘live’ for both small and general businesses, even though the 30 percent allowance for the latter expires at close of business today. If those businesses (annual turnovers greater than $2 million) have undertaken the purchase but are yet to finalise the financing, they need to consider the implications of the various ways of doing it.”
To know more, please contact your Ledge Finance Executive or ring our office on 9324 1777.
**Additional to standard depreciation allowances, for businesses with turnovers above $2 million per annum, a rate of 30 percent applies to eligible equipment ordered between 13 December 2008 and today (June 30 2009) and delivered and used or ready for use prior to 30 June 2010. The rate falls to 10 percent for equipment ordered between tomorrow (1 July 2009) and 31 December 2009 and delivered and used or ready for use by 31 December 2010.
For businesses with annual turnovers below $2 million the allowance is 50 percent for eligible equipment ordered between 13 December last year and 31 December this year, and delivered and used or ready for use before 31 December 2010.