Business owners considering leasing or buying commercial space are urged to act now to take advantage of tax breaks before a Federal Government allowance runs out.
Raine & Horne CEO Angus Raine said the Investment Allowance provided a "double-whammy" tax benefit for businesses, allowing them to claim a deduction for new commercial equipment while still enjoying the benefits of depreciation.
"It was introduced by the Federal Government as part of the Stimulus Package and provides an excellent way of easing some of the expenses involved with fitting out an office, retail space or industrial premises," Mr Raine said.
Peter Bembrick, a tax partner at HLB Mann Judd Sydney, said small businesses with a turnover of more than $2 million a year were eligible for an additional 30% deduction on new depreciable items such as office and IT equipment, free-standing shelves and cupboards, cash registers and removable partitions.
"Eligibility for the 30% reduction relied on each item costing at least $10,000. However rules regarding 'batching' for identical items might help. For example, an order for five notebook computers at $2000 each would qualify," Mr Bembrick said.
The extra deduction did not apply to building improvements or fixtures such as built-in cupboards and shelves, kitchen and bathroom fittings. Also excluded was the cost of computer software, which must be separated from the cost of computer hardware when they were purchased together.
"The deadline for the 30% deduction is 30 June. From 1 July to 30 December 2009, the deduction is trimmed to 10%.
"However if you order before June 30, but don't receive the item until after the deadline, businesses can claim the 30% deduction in the 2009/2010 tax year.
For businesses with a turnover of less than $2 million, the Investment Allowance deadline is 31 December 2009. At least $1000 must be spent to claim the additional tax benefit.
"Business with a turnover of less than $2 million can claim an additional tax deduction of 50 % of the cost of eligible new tangible depreciating assets. This deadline won't run out until 31 December 2009," Mr Bembrick said.
Raine & Horne Commercial Dee Why agent Vincent West said beating the Investment Allowance deadline was a consideration for some buyers in his region.
"We have one buyer who is being urged by hera ccountant to buy office space at Brookvale to take advantage of the 30% deduction that ends on the 30 June," says Mr West.
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