Statement 1: Budget Overview (Continued)
Supporting small businesses and manufacturing
The Government will now allow small businesses to claim up to $5,000 as an immediate deduction for motor vehicles from the 2012‑13 income year, providing a $350 million cash flow benefit to small business. The remaining cost will continue to be depreciated at 30 per cent (15 per cent in the purchase year).
As a motor vehicle is often the most important asset of many small businesses, this measure will be of significant benefit. For a motor vehicle purchased for $33,960, there would be a $9,344 tax deduction in the first year, an increase of $4,250 on the old arrangements.
The Government will also reduce Pay As You Go instalments for 2011‑12, providing a $700 million cash flow benefit to small business and other eligible taxpayers.
These measures will improve cash flow for up to 2.7 million small businesses and builds on past announcements including an early cut to the company tax rate and the $5,000 instant asset write‑off arrangements last year.
The Government is also working to ensure the manufacturing industry benefits from the mining boom with a $34.4 million package to help Australian suppliers better secure resource sector projects.
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