Australian Business Tax Break

Many of you may already be aware of the recent development in the government's Economic Stimulus Package, benefiting small businesses through an investment tax break for the purchase of specific eligible assets. However, you may not have understood these to include IT hardware and software, and the services associated with the installation of these assets.

The break will provide an additional 30% tax deduction for eligible assets of $1,000 or more for businesses with turnovers below $2 Million. For a business turnover that exceeds $2 Million, eligible assets of $10,000 or more will receive the same deduction. 

The following examples illustrate the potential savings for businesses contemplating purchasing IT hardware or software:

IBM Server and Software including Installation  =  $10,000

Additional 30% Tax Deduction in 2008/09 Tax Return  =  $3,000

Effective Cost Saving at 30% Company Tax Rate  =  $900 or 9% of total computer equipment cost

ERP Software  =  $75,000

Services to setup  =  $55,000

Total including Installation  =  $130,000

Additional 30% Tax Deduction in 2008/09 Tax Return  =  $39,000

Effective Cost Saving at 30% Company Tax Rate  =  $11,700 or 9% of total ERP software cost

More detailed information on this Business Tax Incentive can be found on the government web site:
Media Release
Fact Sheet

NB: Nothing in this document constitutes, or is meant to constitute, financial advice of any kind. If you require advice in relation to financial matters you should consult an appropriate professional accountant.