The Investment Allowance – Bonus 50% The Australian Government has made the decision to increase the bonus tax deduction for small businesses to 50% and extend it until 31 December 2009. What is it? – The Basics: A tax deduction of 50% for: • New trailers ordered ex factory • New trailers in dealer stock, even if built before December 13th 2008 • Demonstrator trailers with reasonable demonstrator mileage and use (not second hand equipment). • The bonus tax deduction is available to small businesses with a turnover of $2 million or less. • Small businesses need to invest $1,000 or more per asset to qualify for the deduction. Investment Allowance Calendar - Small Business (Turnover < $2m) Order Placed 50% $11,250 cash in hand on a $75k Delivery 50% trailer (excl GST) Assumes standard 30% Company tax rate 13-Dec-08 30-Jun-09 31-Dec-09 30-Jun-10 31-Dec-10 2008 2009 2010 The 50% deduction applies when: • The trailer is ordered on or between 13th December 2008 and 31st December 2009. AND • The trailer is delivered and invoiced on or before 31st December 2010. The Benefits to the customer: (A) 50% Investment Allowance: • Trailer costs $75,000 (as an example) • 50% tax deduction = $75k x 50% = $37,500 tax deduction • @30% company tax rate, after tax benefit = $37,500 x 30% = $11,250 (B): Notes: (1): The usual depreciation tax deduction still applies in addition; (2): Some forms of trailer finance cause the benefit to be provided to the finance company – check that this appears as reduced lease payments. DISCLAIMER: MaxiTRANS provides this information in good faith based upon information released by the Federal Government. MaxiTRANS accepts no liability for the accuracy of the information provided above or its applicability to any particular business or transaction. MaxiTRANS strongly recommends that purchasers seek their own independent advice from their financiers and tax accountants in respect of the application and operation of the Investment Allowance and their eligibility for the benefit.