Tax bonus for small machinery

Jo FulwoodThe West Australian

Small business entities have been given some good news from the Federal Budget, with business purchases up to the value of $20,000 now tax-deductible.

Bunbury Machinery general manager Rod Ellard said while many farmers did not come under the small business umbrella, it was a big confidence boost for those that did comply.

Businesses must have a turnover of $2 million or less on an annual basis to be considered a small business entity.

"For those farmers who have been using old equipment, this will give them the incentive to upgrade their gear," Mr Ellard said.

He said equipment that would come under the $20,000 limit could include silage grabs, mulchers, slushers or even a new RTV four-wheel utility vehicle for moving around the farm.

"There are a lot of people getting out of the four-wheel motorbikes and into the RTVs," he said.

"We have sold a lot of those in the last 12 months, many due to safety reasons.

"This announcement is definitely good news, it will give farmers the confidence to spend.

"Things they haven't been able to do in the past, they can probably afford to do now."

Ted Rosher, of E & MJ Rosher P/L, welcomed the announcement, saying it was a great initiative for the smaller farmers, particularly market gardeners, orchardists and horticulturalists.

"These farmers would be interested in sprayers, small tractors, rotary hoes and small linkage equipment. It may also be able to be utilised for fire prevention equipment," he said.

"Anything that helps the farmers to improve their productivity is a good move."

Farm Machinery and Industry Association of WA (Inc) executive officer John Henchy said the Budget measure was good news.

He said the cumulative effect of purchases up to $20,000 would have a positive impact on the industry.

"The good thing about this is the Government is not limiting it to new purchases," he said. "From a dealer perspective, it's important to be able move the second-hand equipment."

RSM Bird Cameron director Geoff Hall warned small businesses must take a responsible approach in reviewing their small item capital expenditure plans.

He said the provision of a tax incentive sometimes led to some equipment becoming more expensive because of a greater demand.

"This happened a few years ago when the investment allowance was in place … there were some great tax deductions but alas, once the investment allowance came to an end, many farmers found that the same equipment was suddenly quite a bit cheaper," he said

"This time around though, the incentive could encourage some equipment with a price tag just above $20,000 actually coming down in price in order to qualify for this tax benefit.

"Just remember that you have to actually pay for the $20,000 item of equipment, albeit you receive a tax benefit ($6000 for 30 per cent taxpayers) when you eventually have your tax to pay."

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