The main features are:

• Assets must be new
• Assets must be over $1000
• Assets must have been purchased between 13 December 2008 and 31 December 2009.

This is a bonus tax deduction thus reducing your assessable income, and will be shown in your tax return as a new label called “Small Business and General Business Tax Break”. The depreciation on the asset purchased will be calculated as usual and will remain separate.

Summary of eligible and non-eligible assets

The following table provides a general summary of the kinds of assets that may be eligible for the tax break subject to all other eligibility criteria being satisfied, and those that are not eligible.

Eligible	Not eligible
Tangible depreciating assets for which a deduction is available under section 40-25 of the ITAA 1997 including: - Cars (except those using the cents per kilometer method) ·        Tangible depreciating assets used by small business entities Tangible depreciating assets used in R&D	Intangible assets such as computer software and intellectual property rights Cars using the ‘cents per kilometer’ method Land and trading stock Capital works – buildings, construction expenditure, earthworks Water facilities

Calculating the bonus deduction

The tax break provides a bonus tax deduction — that is, you can use the tax break to reduce your assessable income for a particular income year. The amount of the tax break is not refundable and does not in itself lead directly to a cash payment to you.

To the extent that you are in a tax loss situation for the income year in which you claim the tax break, the bonus deduction will form part of that loss.

Small business entities

If you are a small business entity, then only the 50% rate is relevant. If you are eligible for the lower threshold in an income year, you will be able to deduct 50% of your ‘recognised new investment amounts’ in relation to an asset for that income year.

Example

Ben operates a courier service. He orders and takes delivery of a new, more fuel-efficient, delivery van on 25 June 2009 at a cost of $30,000.

The van is a tangible, depreciating asset for which a deduction is available under section 40-25.

Ben’s investment in the van has an investment commitment time of 25 June 2009 which is between 13 December 2008 and 31 December 2009.

Ben’s first use time in relation to the van is also 25 June 2009 which is before the deadline of 31 December 2010.

This gives Ben a recognised new investment amount in relation to the van of $30,000 for the 2008-09 income year.

In 2007-08 Ben was carrying on a business and his aggregated turnover was less than $2 million and it is likely to be less than $2 million again in 2008-09.

Ben’s new investment threshold is $1,000, which his investment in the van clearly exceeds.

Ben has satisfied all of the eligibility criteria that apply to him and can claim the tax break at the 50% rate. He can claim a bonus deduction of $15,000 in his 2008-09 tax return.