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Senate gives Investment Allowances the green light

The Senate has given the green light to both 30 per cent and 50 per cent Investment Allowance packages, allowing businesses to make significant savings of capital purchases until 31st December 2009 in some cases.

Small businesses with a turnover of $2 million or less qualify for the 50 per cent Investment Allowance, while larger businesses with a turnover exceeding $2 million can qualify for the 30 per cent Investment Allowance.

Larger businesses exceeding $2 million annual turnover will need to act quickly and make their purchases before 30th June 2009, while smaller businesses have until the end of December 2009 to invest.

Both Investment Allowances apply to purchases of new and demonstrator vehicles and equipment, along with major rebuilds and upgrades of existing equipment. What’s more, they are in addition to the standard depreciation claimed for such assets, says financial advisor, Finlease.

Whilst the window of opportunity is limited, the potential savings are substantial, Finlease says.

“There hasn’t been anything like this for over 20 years, so this truly is a once in a lifetime opportunity. When you consider these measures have come at a time when interest rates are at 50 year lows, we believe they will provide significant stimulus to business at a critical time,” said Finlease finance broker, Mark O’Donoghue.

The 30 per cent Investment Allowance applies to vehicles and equipment costing $10,000 and more. They must be acquired or ordered between 13th December 2008 and 30th June 2009, then installed and ready for use by 30th June 2010.

Businesses turning over $2 million or less per annum have more time and will receive more savings. For the 50 per cent Investment Allowance, vehicles and equipment must be $1,000 or more, ordered or purchased before 31 December 2009, then installed and ready for use by 31 December 2010.

Naturally individual companies need to do their own research to determine what benefits can be gained given their current situation, warns Finlease.

However, various scenarios prepared by Finlease for various clients revealed that the tax savings could add up to many thousands of dollars, the broker says.

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