On 12 December 2008 the Rudd Government announced details of a
'10% temporary investment allowance' aimed towards boosting
the economy. From 12:01am 13 December 2008 until 30 June 2009
businesses will be able to claim an additional 10% tax deduction
based on the first element cost base (according to subdivision 40-C
of the ITAA 1997) of all new tangible depreciating assets over the
value of $10,000.
New assets must be ordered or acquired before 30 June 2009 and
must be installed ready for use by 30 June 2010. The term 'new
asset' includes both purchased assets and assets constructed by
the taxpayer (construction must commence before 30 June 2009). Also
note that where an asset is used for private use, only the portion
of the asset used for carrying on a business can be counted towards
the $10,000 minimum expenditure requirement. For example, a $15,000
asset used 50% for private purposes will not be eligible for an
additional deduction ($15,000*50%=$7,500 <$10,000).
See the example below for how these new measures will operate
with Division 40 deductions.
Note that the additional deduction does not affect the written
down value (WDV) of the asset.
You should also be aware of the restrictions on the additional
10% deduction. Notably land and trading stock are not defined as
depreciating assets (under Division 40) and hence will not qualify
for the allowance. Expenditure on capital works (e.g. building
depreciation) will not qualify for the allowance as a deduction is
claimed for capital works under Division 43. Generally an allowance
will be available when a taxpayer can claim a Division 40 deduction
and not available when the expenditure is claimable under other
This measure is in addition to the Government's $10.4
billion Economic Security Package and allowances will be available
to taxpayers in the first year in which a Division 40 deduction is
first claimed for the asset (within the relevant timeframe).
An actuarial review of the Invensys Australia Superannuation Fund showed it to be in surplus to the tune of $189.2 million. In mid 2003, the Invensys Group proposed to the trustee that the surplus be repatriated to the principal employer in the group.
CIVs will have flow-through status for tax purposes and similar criteria as the MITs, to encourage foreign investment.
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