Business Consultants and Coaches

SMEs may have some relief in the form of a 50% Government rebate for businesses with annual revenue of less than $2 million. Federal Treasurer Wayne Swan announced the increase in the allowance from 30% to 50% for new assets purchased by eligible businesses.

The allowance remains

subject to it's original legislation and applies to depreciating assets, subject to tax deductions under Division 40 of the Income Tax Assessment Act. The concession will apply to assets over $1,000 such as fleet vehicles, computers, trade tools, etc, committed to by 31 December 2009 and first used by December 2010.

Examples of this tax benefit provided in Tuesday's budget papers:

Maria runs a retail clothing store and meets the definition of a small business entity. On 7 June she buys and installs six new mirrors for her fitting rooms. The mirrors cost $200 each and are substantially identical, so the cost of every mirror can be amalgamated for the purposes of meeting the $1000 threshold. Maria's total investment is $1,200 and she will be eligible to claim a $600 bonus deduction (being 50% of $1,200) in her income tax return.

• Ben operates a courier service. He also meets the definition of a small business entity. He orders and takes delivery of a new, more fuel-efficient delivery van in June 2009 at a cost of $30,000. Ben will be eligible to claim a bonus tax deduction of $15,000 in his 2008-09 tax return.
• The Sunshine Bakery is a small business. On 12 October 2009, the company purchases and installs a new oven at a cost of $5,000. It will be eligible for a bonus deduction of $2,500, which it can claim in its 2009-10 tax return.