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New tax breaks for small business

23 May 2011

Need a car?  If you’re in small business the Government thinks you do.

Spreading some joy prior to the Federal Budget, Treasurer Wayne Swan has announced an immediate tax write-off for small business of the first $5,000 on the cost of a new car used for work purposes.   

However, the tax write-off is not scheduled to start until the 2012/2013 financial year, if you need your new car now, you’re out of luck.  The write-off is in addition to other previously announced incentives for small business operators due to start in 2012.  These include:

  • an immediate write-off of all assets valued at under $5,000 (up from $1,000 presently);
  • a write-off of all other assets (except buildings) in a single depreciation pool at a rate of 30%.  Currently, small businesses allocate assets to two different depreciation pools, with two different depreciation rates (30 per cent and five per cent); and
  • a reduction in the company tax rate to 29%.

The write-off for cars will replace the current entrepreneur’s tax offset that provides a 25% tax offset on business income where income is between $50,000 and $75,000.

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Disclaimer

This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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