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Act quickly, 30% tax break deadline approaching

The deadline for the government’s 30 per cent Investment Allowance in approaching, with finance broker Finlease urging companies to take advantage of tax deductions to lessen the impact of lost business in hard times.

While companies may be unsure of their immediate needs, Finlease says it is worth being aware of ways to capitalise on the tax deductions which are possible by claiming the Investment Allowance by the end of June 2009.

“For while the deadline is 30 June 2009, you can still reap considerable rewards,” Finlease said in a release to the press today.

According to the document, companies should be aware that purchases need not be completed by the June 2009 deadline, but orders simply need to be placed by then with delivery and installation before 30 June 2010.

This will give companies more flexibility to qualify for the one-off tax deduction, which is available for 30 per cent of the capital cost on eligible new equipment and motor vehicles costing $10,000 or more, and therefore is aimed in part at the manufacturing industry.

According to Finlease, the allowance plan is also designed for companies making purchases for the future.

“Let’s imagine you can anticipate a potential need for several pieces of equipment, but your current needs fall short of that. Then it’s important to at least place your order with the supplier now on the absolute understanding from the supplier that you may reduce that order after June 30 2009. Then the final decision on how many pieces of equipment you require will be agreed upon prior to a predetermined absolute deadline,” said Finlease spokesperson, Mark O’Donoghue.

The broker company claims that manufacturers and process plants could save, as an example, $45,000 in the first year on a CNC milling machine worth $100,000, in which case companies would receive a tax deduction of $30,000 additional to the $15,000 depreciation allowance you can already claim.

Finlease also claims that with interest rates at a 50-year low and equipment and motor vehicles being sold at bargain prices, this stimulus package has come at the right time to make upgrades affordable for industry.

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