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Small Business Tax Break - Investment Allowance Basics

07 March 2011

As part of the 2009 Budget, the Government has announced the extension of the small business tax break (also known as the investment allowance). The tax break was designed to encourage capital investment by Australian businesses.

Despite the Budget extension, time is running out for you to take advantage of the tax break.

It's important to get advice now about whether you should be taking advantage of this one-off incentive. The main features of the tax break are recapped below.

The deduction percentage

Under the Budget announcement, small businesses will now be able to claim a bonus tax deduction of 50 per cent - up from 30 per cent previously of the cost of eligible assets acquired between 13 December 2008 and 31 December 2009, and installed by 31 December 2010.

All other businesses will be able to claim a bonus deduction of:

30% on expenditure for eligible assets acquired between 13 December 2008 and 30 June 2009 and installed ready for use before 30 June 2010; and

10% on expenditure for eligible assets acquired between 13 December 2008 and 30 June 2009 or 1 July 2009 and 31 December 2009 and installed ready for use before 31 December 2010.

Spending thresholds

There are different eligibility spending thresholds for small businesses (one that has a turnover of $2 million per year or less) and other businesses.

Small businesses will only need to spend a minimum of $1,000 per eligible asset in order to qualify for this special deduction. Other businesses will be entitled to the same deductions if they spend a minimum of $10,000 per eligible asset.

Assets eligible for this allowance are new tangible depreciating assets and new expenditure on existing assets used in carrying on your business and for which you can claim a capital allowance deduction.

This bonus deduction is on top of the usual capital allowance (depreciation) deduction that you can claim for eligible assets.


To claim the tax break the asset must be a \"new\" asset not only to the person claiming the deduction but generally. Therefore, the purchase of a demonstration model car may not qualify. If in doubt, seek advice!

Face Accountants is a Sydney based accounting firm and taxation advisory firm. We are committed to providing personalised service and quality, expert advice. Face Accountants Newsletter is distributed to provide information of general interest to their clients and network contacts. The content of this newsletter does not constitute specific advice. Readers are encouraged to consult their tax adviser for advice on specific matters.

Should you require any further information or would like to make an appointment to discuss any of the above, please do not hesitate in contacting Michelle Pearce of Face Chartered Accountants on +61 2 9555 1309 or visit our website at

Face Chartered Accountants

Shop 1 / 440 Darling Street

Balmain NSW 2041

Ph: + 61 2 9555 1309 Fax: +61 2 9555 8360