How does the 50% tax rebate affect depreciation?

I understand the basics that a small business would receive the 50% rebate, but how does it affect subsequent years’ depreciation?

Is the 50% a bonus so a business actually gets 150% depreciation, or is it an accelerated depreciation and the carry forward book value is 50% (or 50% plus normal depreciation) for subsequent years?

The investment allowance is a one-off additional tax deduction. It does not affect your depreciation claim. You continue to claim this in the normal way.

The investment allowance is simply an additional claim you can make in the year when you purchase and install the goods.

So if you purchase the goods in the current financial year you will claim the normal depreciation plus an additional 50% investment allowance deduction for the 2009 income tax year.

Got a question for one of our Experts? Choose one that suits your area of inquiry and send it in to asktheexperts@smartcompany.com.au

To read more Tax Advice, click here.