The Federal Government’s recently announced 30% business tax break means that purchases of earthmoving and construction equipment will become more affordable, according to Komatsu Australia general manager construction Sean Taylor.
The government’s $42 billion Nation Building and Jobs Plan announced on February 5 includes an investment tax break for all Australian businesses, designed to help boost business investment, bolster economic activity and support jobs.
Under the government’s plan (which still has to pass through the Senate) businesses such as civil contractors, quarries, plant hirers and owner-operators will be able to claim a bonus deduction of 30% for eligible assets, including earthmoving and construction and other capital equipment costing $10,000 or more.
To be eligible for the investment allowance, businesses must
• acquire or start to hold the equipment under a contract entered into between December 13 2008 and the end of June 2009 and
• have it installed ready for use by the end of June 2010.
For eligible assets purchased between July 1, 2009 and December 31, 2009, the bonus deduction drops to 10%.
These deductions are on top of the usual capital allowance deduction claimable for the asset as part of a business’s income tax return.
As an example, under the 30% business tax break, a piece of equipment costing $200,000 will be eligible to claim a deduction of 30% of that $200,000 — or $60,000. At the standard company tax rate of 30%, that would equate to a reduction in tax for the 2008-09 financial year of $18,000.
“The Federal Government’s 30% business tax break presents an opportunity for contractors, plant hirers and quarry operators to purchase equipment, and gain reductions in their tax for this current financial year,” Taylor said.