Company

Link: http://www.treasury.gov.au/documents/1505/PDF/Tax_Break_EM.pdf

The federal government has given a special 30% tax break on new investments. You can get a 30% claim if you buy by June 30, 2009. According to the government figures, it will cost them about four billion dollars.

How it works is, say a small newsagent purchased today $1,200 worth of computer equipment. They pay this financial year almost nothing because the year is almost over. Yet they can claim immediately $400 on top of the $1,200 you can already claim.

Clearly it is a very good deal which I know sounds too good to be true.

There are however some conditions. Here is a detailed FAQ on the tax break.

Many people have complained as this tax break unfairly excluded software.

But I was talking today with a client’s accountant. He explained it to me and it appears now, I have some very good news for DOS users.

We unlike so many other software companies we do not charged for software for our DOS to windows upgrade. For ten years, we have not charged so it is certainly not for avoiding tax that we do not charge.

So reading the examples supplied in the attached document, he explained that:

Example 1.13

.…

Edward subsequently attaches a towbar to the vehicle. The towbar enhances the vehicle’s capacity to transport equipment and parts that are used in Edward’s landscaping business. The expenditure incurred by Edward to acquire and attach the towbar to the vehicle forms part of the second element of cost of the vehicle under paragraph 40-190(2)(a). The expenditure is capital expenditure incurred in bringing the asset to its present condition.

Computer equipment and if there were any added charges, attached to the upgrade to the computer would be the same situation. Since our software for DOS users has never been charged, so logically all the expenditure we did charge here for the improved computer system is probably full claimable for this tax break.

That resulted in a full extra 30% bonus for our DOS user.

Just another example of how doing right for our clients, has produced an unexpected bonus to them.

Disclaimer: I am not an accountant. Anyone looking into this tax break should check with your own accountant before proceeding.