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50%
Tax Deduction on assets for Small Businesses
Under the proposed
‘tax break’ concession (also referred
to as the investment allowance) the deduction able
to be claimed by business taxpayers in respect of
the GST-exclusive cost of acquiring or constructing
new tangible depreciating assets, or for enhancing
existing assets, required the ‘investment
commitment time’ to be no later than 30 June
2009 for the taxpayer to be in a position to claim
a deduction equal to 30 per cent of that cost. Generally,
the further requirements for this deduction to be
available at the originally proposed 30 per cent
rate were:
1. cost exceeded the minimum expenditure
threshold (generally calculated on an asset by asset
but with a limited aggregation
concession)
2. asset be used by the taxpayer
in the Australian business or installed ready for
use by 30 June 2010.
In the case of ‘small business entities’
the minimum expenditure threshold is $1,000. Otherwise
it is $10,000. Under the original proposal the 30
per cent rate could not be obtained because the
asset was not used or installed ready for use by
30 June 2010, a lower 10 per cent rate was to apply
if the asset was used or installed ready for use
by 31 December 2010.
In order to assist ‘small business’
(which generally is where ‘annual turnover’
is under $2 million), the Treasurer announced as
one of the Budget measures that these taxpayers
will be able to claim the ‘tax break’
deduction (which is in addition to the usual deduction
for depreciation) at the rate of 50 per cent of
the cost of eligible assets acquired between 13
December 2008 and 31 December 2009, and installed
for use by 31 December 2010.
With these proposed changes to the ‘tax break’
concession, the deduction able to be claimed by
reference to the cost of qualifying expenditure
is set out in following table.
Tax Break (Investment Allowance)
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| Business
Entity |
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Investmen
commitment
time(inclusive) |
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Date
of first use or
installed ready(inclusive) |
|
Rate |
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| Small
business |
|
13
December 2008 to
31 December 2009 |
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By
31 December 2010 |
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50% |
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| Other
business |
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13
December 2008 to 30 June 2009 |
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By
30 June 2010 |
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30% |
|
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| Other
business |
|
1
July 2009 to 31 December 2009 |
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Between
1 July 2009 &
31 December 2010 |
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10% |
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Tax
Break (Investment Allowance)
The
private health insurance tax rebate is currently available
for a percentage of the premium paid to a registered health
insurer for a complying private health insurance policy.
The percentage available is determined by the age of the
oldest person covered by the policy (30 per cent where
aged less than 65 years). The current rebate is not means
tested. This will change as a result of the Budget with
effect from
1 July 2010. At the same time, the Medicare levy surcharge
(currently 1 per cent of taxable income and reportable
fringe benefits) will increase under a “carrot and
stick” approach. This is designed to encourage high
income earners to keep their private health insurance
cover.
The Medicare Levy Surcharge is levied on Australian taxpayers
who do not have private hospital cover and who earn above
a certain income. The surcharge aims to encourage individuals
to take out private hospital cover, and where possible,
to use the private system to reduce the demand on the
public system.
The surcharge is calculated at the rate of 1% of taxable
income. It is in addition to the Medicare Levy of 1.5%,
which is paid by most Australian taxpayers. The Medicare
Levy Surcharge is imposed on individuals earning over
the threshold who do not have an appropriate level of
hospital insurance. The threshold is $70,000 for individuals
and $140,000 for families. |
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