Investment Allowance-Does your finance contract make your purchase ineligible for the concession?
The Small Business and General Business Tax Break was a measure implemented by the government to help stimulate new capital investment by Australian businesses to help boost the economy through the "GFC".
The tax break is available for eligible assets where an ‘investment commitment” was made between 13 December 2008 and 31 December 2009(eligible period). The thresholds and deduction rates vary depending on size of business, the date of purchase and when the asset is installed ready for use.
The ATO Guide to the Small Business and General Business Tax Break (which represents the ATO's interpretation of the legislation) identifies that there "may be an issue in claiming a deduction on an eligible asset depending on the type of finance used to acquire the asset.”
This is a technical issue which has only recently surfaced and relates to the wording used on some finance contracts.
In particular, this issue is important in situations where a large eligible asset was ordered before 31 December 2009 but delivered after that date- the type of finance used is crucial in identifying whether a deduction for the investment allowance is available.
If you are about to receive the delivery of an eligible asset and sign the finance contract, we recommend you contact McGillivrays urgently so we can assist in reviewing the contract and ensure that your business remains eligible for the Investment Allowance.
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