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The small business 50% depreciation tax break,  how does it work?

If you are a small businessman like me chances are, the additional tax deductions offered by the government for the 2008-2009 tax year were not of much help given that you have to have had some profit to get any real benefit. Now that the disaster that was the 2008-2009 tax year is over its time to start thinking positive and planning for a recovery.


 Tom Radovanic has over eleven years experience in the equipment leasing industry.
He attended University of North Carolina at Charlotte - Belk College of Business and is now the Director of True Lease Pty Ltd, a specialised equipment finance broker in Sydney. He also works with Logistics Bureau as a specialist consultant.

From talking to many equipment vendors I believe without being unrealistically optimistic there is certainly every reason to think this year is going to be a lot better. Another thing I came across is a lot of people still don’t really understand how the 50% depreciation bonus works.

Firstly this will apply for companies with turnover of less than $2M per annum on assets costing more than $1000. Companies with turnover in excess of $2M still can claim but the allowance is only 10%

The two main points of confusion are:
1. 50% depreciation is over and above the normal deprecation schedule
2. It is a normal deduction not a credit therefore if by taking up the bonus result in a tax loss it can be carried forward into future years

For example, a business that purchases new printing equipment to the value of $50,000 can claim a $25,000 tax deduction plus the normal depreciation plus the GST credit in the 2009-2010 tax year. But that’s not all!  You can even finance the purchase with a Commercial Hire Purchase or Chattel Mortgage and still get all the benefit, how good is that?

There has never been a better time to invest in, and upgrade to new equipment. So if you managed to survive last year chances are you will be around for many years to come but this tax bonus won’t , you must have the equipment at least ordered by December 30th 2009 and fully installed and operational by end of the financial year.

Tom Radovanic
True Lease Pty Ltd

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