Temporary Investment Allowance

Dated: February 2009

The Government has introduced a temporary investment allowance to encourage Australian businesses to undertake capital investment. The investment allowance will be an additional tax deduction equal to 10 per cent of the cost of an eligible asset. The allowance is confined to new assets and new expenditure on existing assets, used in Australia. A minimum expenditure threshold of $10,000 will apply. Where an asset is partly used for private or non-taxable purposes, only the portion that is used for a taxable purpose in carrying on a business will count toward meeting the threshold.

Assets that have previously been used or held for use will be excluded. The investment allowance will be available for new assets which are acquired, held under a contract or constructed after 12.01am AEDT 13 December 2008 and before 30 June 2009. These assets need to be installed and ready for use by the end of 30 June 2010 in order for the investment allowance to be claimed.

Land and trading stock are excluded from the definition of depreciating assets, and will not qualify for the investment allowance.