Tax Break on new vehicles ends soon.

You only have until December the 31st this year to take advantage of the 50% Tax Break on New Vehicles. This can include a new Motorcycle if your business qualifies, and you can justify the purchase.

The federal budget has revealed an increase in the tax break for small and other sized businesses when they purchase equipment for more than $1,000.

This presents a fantastic opportunity particularly for small business in terms of vehicle acquisition as they can claim an exceptional tax rebate.

Simply put, subject to meeting certain criteria, businesses will be able to claim up to an additional 50% tax break on new vehicle purchases in the first year of ownership. This is on top of any standard depreciation claimed and, in year two, the asset will, for future accounting purposes, be valued as if it had just been depreciated as normal.

Key Points to Remember

The tax break will only apply for brand new vehicles (and demonstrators)

Vehicles must be purchased (paid for) before December 31st 2009, and delivered before December 31st 2010.

Even if the primary use of the vehicle changes over time, as long as the vehicle was purchased for the principal purpose of carrying on a business, the tax break may still be claimed. So even for a car/bike that is used 100% for private use by an employee, if the car is purchased by the company it is an employment cost (assuming FBT is paid etc) and it is part of the employer carrying on their business and will be eligible to the Investment Allowance

Vehicles held under a lease may still qualify for the tax break. This depends on the structure of the lease and whether the arrangement is considered akin to a rental agreement (eg operating lease) or an asset purchase under finance terms (traditional finance lease) by the tax office. Best to seek advice from your accountant regarding the status of a tax rebate in this situation.

There are minimum purchase thresholds for the allowance to be claimed.
TXT_Izquierda

For further information visit:
http://minister.innovation.gov.au/Emerson/Pages/SMALLBUSINESSTAXBREAKBOOST.aspx
and download this eligibility flow chart

Note: Please seek instruction from your accountant before acting on any information rendered. No responsibility will be taken for any loss as a result of reliance upon this information.

So if your business is eligible, and you are keen on a new Trials bike for 2010 you need to act before the end of December!

www.thehellteam.com
02.9966.5562
arnoux@thehellteam.com

Paul Arnott