As part of its support for jobs and Australian businesses, the Government has announced that it will fund an investment tax break for businesses.
Part of that package is The Small Business and General Business Tax Break.
The package will mean a small business that buys and installs a $2,000 computer before the end of June 2009 can claim an additional $600 deduction in its 2008-09 tax return.
David Macintosh, owner of local IT service provider, Mac to Front, told CRN that the Government's plans will encourage people to bring forward IT projects or upgrade their IT equipment.
"Most businesses have been holding their breath on the IT front," he said. "They are delaying a number projects because they are worried that something bad is going happen around the corner."
He added: "Even though our clients are in a comfortable position, they are doing a wait and see.
Although Macintosh was positive about the package, he wasn't sure if it would encourage clients to buy or install products before June 30.
"Most will wait until 15 June to make a decision so we won't see any benefits from the stimulus for another four or five months.
"Also when the projects we might not be able to cope with the demand in the time frame.
"I might get 20 customers turn around and say they want projects done before June 30, so we have to fudge papers or palm them off."
Macintosh claims it's more likely that he will order the products and invoice clients before June 30 and install them post 30 June.
"Knowing our clients, they won't make a decision until the very end.
"The same thing happened when the GST was introduced, everything happened in the last week."
According to the Federal Government, a business that buys and takes possession of a $60,000 backhoe (digging machine) by the end of June 2009 can claim an additional $18,000 deduction in its 2008-09 tax return.
While small businesses can claim an additional 30 percent tax deduction for eligible assets costing $1,000 or more that they acquire from 13 December 2008 to 30 June 2009, and install by 30 June 2010.
For eligible assets costing $1,000 or more that they acquire from 1 July 2009 to 31 December 2009, they can claim an additional 10 percent deduction where they are installed by 31 December 2010.
To benefit from this tax break a small business must have a turnover of $2 million a year or less, while other businesses can receive the same deductions for eligible assets greater than $10,000.
Lee Curtis, consultant at IT integrator, ICE systems, said the package wouldn't impact the company's bottom line because its clients have turnovers of more than $2 million.
However it still has customers that are relatively small and it will be great news for them.
"I have a few friends that run small businesses and know smaller guys in the industry that work out of Coffs Harbour," he said.
"They work with smaller businesses and it will be a huge deal for them to be able to offer their clients a price reduction on IT products.
"This is significant because in the last quarter of 2008, US suppliers put their prices up.
"This will make smaller resellers more competitive and give them a small edge."
Curtis believes the Government is bold in tackling these issues early on with a stimulus package because the feedback out of the US and UK is that "Australia hasn't seen the recession yet".
Issue: 315 | May 2013
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