Small Business and General Business Tax Break

Small businesses with current annual turnover of less than $2 million or turnover of less than $2 million in the prior year may be entitled to a deduction of 50% of the cost of the asset. 

All other businesses may be entitled to a deduction of 30% of the cost of the asset if the investment was committed to prior to 30th June 2009 or a 10% deduction for all other investments. 

The deduction is claimed in the business' annual tax return.

Only new tangible depreciating assets, including machinery, equipment, motor vehicles (excluding cars subject to the cents per kilometre method) qualify for the deduction, and they must be principally used in Australia for the purpose of carrying on a business.  Intangible assets such as computer software are not eligible.  Leases are also not eligible, except for luxury car leases.

The following expenditure thresholds also apply:

• Small business - $1,000 per asset
• Other entities - $10,000 per asset

To reach these thresholds businesses can aggregate investments that are a set of assets or substantially identical assets.  You can also aggregate expenditures in more than one financial year.