Important Announcement
Investment Allowance Benefits for Trailer Purchasers

The Federal Government has announced a 30% temporary investment allowance, effective immediately for “tangible assets used in carrying on a business for which a deduction is available under the core provisions of Division 40” of the Income Tax Assessment Act 1997.

What does this mean for trailer purchasers?
• The investment allowance is applicable to semi-trailers, vans, tippers and similar equipment as they all fall under Division 40. The asset (the trailer) must be new and not used and must have a value exceeding $10,000.

• It provides a 30% tax deduction – which means that if, for example, the trailer costs $75,000 (excluding GST), the purchaser obtains a tax deduction of $22,500 (30% of the purchase price excluding GST).

• Considering that the company tax rate is 30%, the net benefit after tax to a business is 10% of the purchase price excluding GST ($7,500 in the example used above)

Timing:
• The investment allowance is “available for businesses who hold or start to construct the asset after 12.01 a.m. AEDT 13th December 2008”. Effectively, it applies to trailers delivered from that date.

• The trailer must be acquired or ordered in the current (F2009) financial year.

• The trailer must be “ready for use” (delivered and invoiced) on or before 30 June 2010

• The tax deduction is effective only in the tax assessment for the financial year in which they pay for the trailer.

Eligibility:
• To be eligible, the purchaser must own the asset (the trailer).

• Outright purchase provides the benefit to the purchaser.

• NOTE: Some forms of trailer finance may adversely affect the eligibility of the purchaser to receive the benefit. It is important that the purchaser seek independent advice on this aspect.

DISCLAIMER:
Barker Trailers provides this information in good faith based upon information released by the Federal Government and received from independent tax advisors. Barker Trailers accepts no liability for the accuracy of the information provided above or its applicability to any particular business or transaction. Barker Trailers strongly recommends that purchasers seek their own independent advice from their financiers and tax accountants

Issued: 13 January 2009

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