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Sales incentive gets budget boost
Government increases and extends business tax break to stimulate new vehicle sales
13 May 2009
LAST night’s federal budget contained a surprise bonus for the car industry with the government announcing it would increase the investment tax break incentive for small business and extend it by six months.
Treasurer Wayne Swan said small businesses would now be able to claim a bonus tax deduction of up to 50 per cent – up from 30 per cent – on the cost of new vehicles acquired after December 13, 2008.
The Small Business and General Business Tax Break was to have ended on June 30, but has been extended to December 31.
The Federal Chamber of Automotive Industries (FCAI), which was concerned that the proposed legislation had yet to be enacted by parliament and was therefore pushing for an extension, has welcomed the government initiative, saying it would provide a valuable incentive for new-vehicle sales.
“The tax break will help stimulate the new vehicle market and support jobs in the industry,” said FCAI chief executive Andrew McKellar.
“Every plumber, every painter, every electrician – in fact any small business owner – is urged to take full advantage of this offer.
“This measure offers an incentive of real value and will encourage small business owners to bring forward purchasing decisions.
“The tax break offers a huge saving on the cost of a new vehicle. It provides a real boost in confidence to small businesses looking to undertake new investment in coming months.” Car companies will welcome the extra stimulus, but remain keen to see the legislation enacted quickly so they can avoid having to place qualifications on advertisements promoting the tax break.
Toyota Australia executive director David Buttner summed up the problem when he told GoAuto last week: “In any advertising that mentions the investment allowance, we have included an extensive disclaimer that clearly indicates it is a ‘proposed’ measure and depends on it being passed into law. We have also urged potential buyers to seek independent advice as to their eligibility.” So far, the 30 per cent incentive has failed to ignite sales, with figures for April showing light commercial vehicle sales lagging behind the market average.
If the legislation fails to be passed in both the House of Representatives and the Senate this week, it could be at least another five weeks before it is enacted because the Senate is not due to sit again until June 15.
Budget papers have revealed that the tax deductions will cost the government about $141 million.
“Small businesses are the engine room of the Australian economy, accounting for around 95 per cent of all businesses and around 50 per cent of the all private sector employment,” said the budget papers.
“This will further help them to invest, bolster economic acidity and support Australian jobs.”
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