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Newsletter April 2009

In an effort to generate an immediate boost to business investment, the Federal Treasurer announced a temporary 30% investment allowance for new assets purchased, ordered, or started to be constructed prior to 30 June 2009 where the cost of the asset was more than $10,000 and the asset was used in a business.

The Treasurer reduced the asset value threshold for small business from $10,000 per asset down to $1,000 per asset. Small businesses must have a turnover of less than $2 million a year to qualify.

An additional tax deduction of 10 per cent of the cost of eligible new depreciating assets acquired under a contract, or started to be constructed, between 1 July 2009 and 31 December 2009, has also been introduced.

 Key Dates; 

	Contract entered into by:
	30 June 2009	30 June 2010
Asset installed by;
30 June 2009	30% in 2008-09
30 June 2010	30% in 2009-10	10% in 2009-10
31 December 2010	10% in 2010-11	10% in 2010-11

Motor Vehicles

New motor vehicles used for business purposes may qualify for the allowance. However, cars for which the ‘cents per kilometre’ method is used to calculate car expenses are not eligible. The  maximum 30% investment allowance for luxury cars will be based on the luxury car limit, which for the 2008-09 year is $57,180.

Leased Assets

Leased assets will generally not qualify for the allowance. However, assets under a hire purchase agreement, chattel mortgage, or a luxury car under a lease agreement will qualify.

Other Assets that do not qualify include;

• Intangible assets such as computer software and intellectual property rights,
• Land
• Trading Stock
• Capital works – buildings, construction expenditure. 

Taxpayers whose income-producing use of a car does not exceed 5,000 kilometres during the year can deduct car expenses on a per kilometre basis (i.e. by multiplying the number of relevant kilometres by the rate per kilometre) as shown in the following table;

Description	Engine capacity of a car not powered by a rotary engine	Engine capacity of a car powered by a rotary engine	Rate per kilometre (cents)
Small car	Not exceeding 1600cc	Not exceeding 800cc	63
Medium car	Exceeding 1600cc but not exceeding 2600cc	Exceeding 800cc but not exceeding 1300cc	74
Large car	Exceeding 2600cc	Exceeding 1300cc	75

 

Taxpayers whose income-producing use of a car does not exceed 5,000 kilometres during the year can deduct car expenses on a per kilometre basis (i.e. by multiplying the number of relevant kilometres by the rate per kilometre) as shown in the following table;

Description	Engine capacity of a car not powered by a rotary engine	Engine capacity of a car powered by a rotary engine	Rate per kilometre (cents)
Small car	Not exceeding 1600cc	Not exceeding 800cc	63
Medium car	Exceeding 1600cc but not exceeding 2600cc	Exceeding 800cc but not exceeding 1300cc	74
Large car	Exceeding 2600cc	Exceeding 1300cc	75

 

The taxable income levels for repayment of Higher Education Loan Programme (HELP) debts, formerly HECS, for the 2009-10 year and the repayment levels are as follows;

HELP repayment income*	Repayment rate
Below $43,150	Nil
$43,150 - $48,066	4%
$48,067 - $52,980	4.5%
$52,981 - $55,764	5%
$55,765 - $59,943	5.5%
$59,944 - $64,919	6%
$64,920 - $68,336	6.5%
$68,337 - $75,203	7%
$75,204 - $80,136	7.5%
$80,137 and above	8%

* Repayment income is the sum of taxable income, reportable fringe benefits and any exempt foreign employment income for the year, adjusted for any net rental loss on rental property investments.

The Taxation Office recently announced changes to superannuation thresholds for the 2009-10 financial year, effective from 1 July 2009. 

The current and new contribution limits are summarised in the following table;

Super Contributions	2008-09 Financial Year	2009-10 Financial Year
Concessional (Pre-Tax)
Maximum Contribution	$50,000 p.a.	$55,000 p.a.
Transitional limit until June 2012 (aged 50+)	$100,000 p.a.	$100,000 p.a.
Non-Concessional (Post Tax)
Maximum  Contribution	$150,000 p.a.	$165,000 p.a.
3 Year Bring Forward Rule	$450,000 p.a.	$495,000 p.a.
Lump Sum Payout
Life time limit on tax free lump sum where age is 50 - 60	$145,000	$150,000