Right across Australia, entrepreneurs are asking themselves the same question – what’s in Kevin Rudd’s $42 billion stimulus package for me?
Unfortunately, the answer for most SMEs is; not much.
While companies in the building and property sector are set to receive a boost from extra spending on housing, construction projects and infrastructure improvements, most businesses will have to hope that a general improvement in business conditions flows through to their business.
The specific measure for SMEs in the $2.7 billion tax break is designed to encourage companies with annual turnover of $2 million or less to bring forward spending plans to before 1 July this year.
Under the plan, businesses that spend more than $1000 on eligible assets (this effectively means plant and equipment) can claim an additional tax deduction of 30%, providing they are installed by 30 June 2010.
Treasury has provided two examples of the sorts of deductions that companies can expect to enjoy:
Businesses that have turnover greater than $2 million can cash in on the 30% tax deduction when they spend more than $10,000 on eligible assets.
If you can’t find the money to make a big purchase before 1 July, the Government will offer a bonus 10% tax deduction on all eligible purchases over $1000 made between 1 July and the end of December, proving they are installed by 31 December 2010 (larger businesses need to spend $10,000).
So is the tax break actually worth it?
Greg Hayes, senior partner at Hayes Knight, says it won’t help people who have no intention of purchasing assets or are suffering the affects of the credit crisis and don’t have the money to purchase any assets.
However, if they were planning to buy a new computer or other assets it will help. “This might be the thing that gets them over the line.”
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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