The new 50% Small Business Investment Tax Break explained

Over on our original site – 30percent.com.au which focuses on the investment tax break for general businesses, we posted an article that documented the changes announced in last night’s Budget.

In fact, if we had 50percent.com.au set up last night we would have posted it here.  But we didn’t.  So now that we are all up and running, is a copy of the article…

Budget 09:  Small Business Tax Break increased to 50%, extended 6 months

For those of you following the Federal Budget tonight… especially those of you who have annual revenue below $2 Million… there is some great news.

The Treasurer put it nicely in his budget speech tonight:

Mr Speaker, small businesses are the backbone of the Australian economy, employing around half of all private sector workers.

That is why the Government will also provide immediate additional assistance by increasing the Small Business and General Business Tax Break to 50 percent for eligible assets ordered between December 2008 and December 2009, in addition to assistance for small businesses to take advantage of e-business opportunities.

We are currently digging deeper through the budget papers to find any more detail about the change (and if it just applies to Small Business, or as you could interpret from the speech – all businesses).  Keep reading, or subscribe to the newsletter below for regular updates.

UPDATE:  More detail found in Budget Paper No. 1

Looks like the change is just for small businesses, and NOT General Businesses who will continue to be able to take advantage of a 30% investment tax break.

As mentioned in Budget Paper No. 1:

The bonus tax deduction under the Small Business and General Business Tax Break will be increased to 50 per cent for small businesses.  This will further help them to invest, bolster economic activity and support  Australian jobs.  The tax deduction is available for eligible assets costing $1000 or more acquired between 13 December 2008 and 31 December 2009 and installed and ready for use before 31 December 2010.  The expansion will have an estimated cost to revenue of $141 million.

UPDATE:  More detail found in Budget Paper No. 2

The wild goose chase continues for detail on the announcement tonight

In Budget Paper No. 2, there is more information on changes to the Small Business and General Business Tax Break.

The Government will expand the Small Business and General Business Tax Break announced in the February 2009 Updated Economic and Fiscal Outlook to provide additional assistance to small businesses.  A bonus deduction of 50 per cent will be available to small businesses that acquire an eligible asset between 13 December 2008 and 31 December 2009 and install it ready for use by 31 December 2010.  The previously announced 30 percent and 10 percent bonuses will continue to apply to all other businesses.  This expansion will have an estimated cost to  revenue of $141 million over the forward estimates period.

Also in the same section of Budget Paper No. 2, the Government outlines some of the enhancements the are going to make to the original Small Business and General Business Tax Break…

The Government has also enhanced the Tax Break for all businesses since it was announced on 3 February 2009.  A taxpayer can now aggregate their investment in assets that are substantially identical, or that form a set, to meet the threshold.  Where assets are jointly held, a taxpayer can recognise all other business interests in the asset for the purpose of meeting the threshold, but will only be able to claim the Tax Break on their interest in the asset.  Where a taxpayer has met the investment threshold for an asset, they can claim additional investment in the assets as part of the Tax Break.  These enhancements have an unquantifiable but small revenue impact.

You can read more about this, and other budget items that might impact your life (like the extension of the first home owners grant) on the budget.gov.au site