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Capital Allowance Concessions to be abolished by 31 December 2013

Tuesday, 3 December 2013    Accounting,Tax

If you are a small business and you are in the market for a new car or small piece of office equipment, now is the time to purchase this before 31 December 2013 before the Coalition abolishes Capital Allowance Concessions.

A potentially overlooked result of the recent Federal Election is the proposed change to the Capital Allowance Concessions proposed by the Labour Government, now to be abolished by the Coalition as part of the wind-back of the Mining Tax.

Small business owners are being urged to bring forward capital purchases to before 1 January 2014, or risk losing the generous concessions, which apply to small items of Plant and Equipment, and to Motor Vehicles.

The Capital Allowances available to Small Business until 31 December 2013 are:

1. An immediate Tax Deduction available for business plant and equipment purchased with a cost less than $6500.

2. A Small Business that purchases a Motor Vehicle for Business use is entitled to an immediate deduction of the first $5000 value of the Motor Vehicle plus 15% of any additional value. The remaining value is then allocated/depreciated in the normal fashion.

When the proposed amendments are introduced, and if passed, the threshold will reduce to the previous amount of $1000 (for Plant and Equipment) and the special deduction for Motor Vehicles will be removed.

It is important to keep in mind that any assets acquired in order to take advantage of the generous concession, MUST be "first used" or "installed ready to use" before 1 January 2014. Execution of a Contract of Order for the equipment will not meet the strict test applied under taxation law.