Warning: This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
|
|
Hire purchase arrangements and luxury car leases
If you are not a small business entity (that is, you have a turnover of $2 million or more), you intend to acquire a depreciating asset under a hire purchase arrangement or enter into a luxury car lease and want to claim the 30% business tax break, you need to enter into the hire purchase arrangement or lease agreement by 30 June 2009, not just make an order contract with the supplier by that date. If you are a small business entity, you will have until 31 December 2009 to enter into the hire purchase arrangement or lease agreement under which you will hold the asset to be eligible for the tax break.
|
Investment commitment time
To be eligible for the tax break, you need to commit to investing in an eligible depreciating asset between 13 December 2008 and 31 December 2009. The time at which you commit to investing in the asset is known as the 'investment commitment time'.
More specifically, if you are not a small business entity and want to qualify for the 30% deduction, you need to commit to investing in the asset between 13 December 2008 and 30 June 2009 and meet all other eligibility criteria. Small business entities need to commit to investing in an asset between 13 December 2008 and 31 December 2009 to qualify for the 50% deduction and meet all other eligibility criteria.
Generally, when you acquire a new asset, the investment commitment time will be the point in time when you have:
- entered into a contract under which you hold the asset or will start to hold at some point in time
- started to construct the asset, or
- started to hold the asset in some other way.
Assets acquired under a hire purchase arrangement or luxury car lease
Under the capital allowances rules, if you enter into a hire purchase arrangement for a depreciating asset or a luxury car lease, the contract under which you hold the asset is the hire purchase arrangement or lease. Therefore, for hire purchase arrangements and luxury car leases, the investment commitment time is when you enter into the arrangement or lease, not when an order contract is made with the supplier.
If you are not a small business entity and want to claim the 30% tax break, the hire purchase arrangement or luxury car lease must be entered into on or before 30 June 2009. If you miss this investment deadline you may only be eligible for the tax break at the reduced rate of 10%.
If you are a small business entity, you have until 31 December 2009 to enter into the hire purchase arrangement or luxury car lease to be eligible for the 50% tax break. Investment decisions made after that date will not attract the bonus deduction.
More information
Last Modified: Tuesday, 16 June 2009