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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