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Investment Allowance to Boost Business Investment

The Government has recently announced a 10 per cent temporary investment allowance in the form of an additional tax deduction which will encourage important capital investment by Australian businesses.

The allowance will be in the form of an additional tax deduction equal to 10 per cent of the cost of an eligible asset. The allowance will be applicable to most new tangible depreciating assets which includes most items of plant and equipment over $10,000 which are acquired or ordered by the end of the current financial year.

The allowance will apply from 13 December 2008 until the end of 30 June 2009. To be eligible a taxpayer must start to hold the asset under a contract entered into between those times or start to construct the asset between those times. Assets must also be installed ready for use by the end of 30 June 2010