One-Off Bonus Deduction for Small Business Assets.

An additional tax deduction of 50% off the cost of an asset will apply;

  • if it has a value greater than $1000 excluding GST,
  • and is bought by a small business that has a turnover less than $2 million,
  • and is bought between 13 December 2008 and 31 December 2009,
  • If ownership occurs between the above dates, the item can be deliverd and installed by 31 december 2010

There are additional rules for entities that have a turnover which exceeds $2 million…  (but that won’t be covered here).

So how does it work? An asset such as a motor vehicle is bought which costs $30,000, and if bought before the 30 June 2009 a tax deduction of $15,000 can be claimed for the 2009 year.

I receive numerous queries at my office, many clients expect the $15k to come back to them, unfortunately this is not the case. Assuming that your income is in the 30% tax bracket you will save $4,500 in tax.

My advice to clients is to bring forward an asset purchase, if it was planned in the foreseable future, but not to spend 30k for a 4.5k savings in tax.