Warning: This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.
Examples
To help you understand how the business tax break works, here are some examples to illustrate some of the concepts in the links below.
50% tax break example
Maria is a small business owner who buys a computer for her shop and installs it in June 2009.
The computer costs $2,400 (excluding GST and the cost of the software used on the computer). Maria will be able to claim an additional $1,200 tax deduction (50% of $2,400) in her 2008-09 business income tax return.
After applying the 30% company tax rate * (the rate which applies to her business), this tax deduction would reduce the amount of tax Maria's business would have to pay by $360.
* If you're a sole trader, your personal tax rate would apply.
30% and 10% tax break example
Frank owns a bakery which has an annual turnover of $2 million or more. Frank buys an oven for $15,000 on 29 June 2009. The oven is delivered and installed and is used for the first time on 17 August 2009.
For 2009-10, Frank can claim the tax break at the 30% rate. He can claim an extra tax deduction of $4,500 for the 2009-10 income year.
Gail's business also has an annual turnover of $2 million or more. However, due to buying her oven at a different time to Frank (after 30 June 2009), she will be eligible for the 10% additional tax break and not the 30% rate. Gail buys an oven for $15,000 on 10 August 2009 and uses it for the first time on 17 August 2009. Gail's extra tax deduction will be $1,500 for the 2009-10 income year.
Buying a set of assets
Frederica operates a courier service with an annual turnover of less than $2 million. This means she would need to spend a minimum of $1,000 on an asset for it to be eligible for the 50% tax break.
In July 2009 she buys a base station for a two-way radio system she uses in her main office to communicate with drivers who are out making deliveries. At the same time she buys a handset for each delivery van. The base station costs $500 and the seven handsets cost $100 each.
The base station and handsets are a set as they are designed and intended to function together. The assets are used straight away in the business. The combined cost of the base station and hand sets is $1,200 which is above the tax break minimum threshold of $1,000 for a small business. Frederica can therefore claim an additional $600 tax deduction in her 2009-10 income tax return.
Last Modified: Wednesday, 9 December 2009