Stephen Conroy (Victoria, Australian Labor Party, Deputy Leader of the Government in the Senate) Share this | Link to this | Hansard source

I table a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

This bill introduces the small business and general business tax break. This measure is a key part of the Government’s response to the global economic crisis.

The key focus of the tax break is to provide an incentive for businesses to bring forward and continue with their capital investment plans, by lowering the after-tax cost of acquiring new assets.

The Tax Break has a total cost of $3.7 billion over the forward estimates.

As in other countries around the world, business investment in Australia has deteriorated dramatically over recent times. It is imperative therefore, that steps are taken to arrest this decline.

The Small Business and General Business Tax Break increases and extends the investment allowance the Government announced in December last year. The 2009-10 Budget included a further expansion of the Tax Break for small business.

Small business entities—that is, those businesses with a turnover of less than $2 million—can claim a bonus deduction of 50 per cent of the cost of eligible assets they contract for, or start to construct, between 13 December 2008 and 31 December 2009. They must start to use, or have the asset installed ready for use by 31 December 2010.

The Tax Break applies to new assets and new investment in existing assets. The Government has also made it easier for businesses to take advantage of the Tax Break by allowing the aggregation of similar assets or assets which form part of a set. Small business entities need to invest a minimum of $1,000 to qualify for the tax break. All other businesses need to invest a minimum of $10,000.

To provide the necessary boost to investment in plant and equipment, the Tax Break is available for new investment in tangible, depreciating assets. These assets are those for which a deduction is available under Subdivision 40-B of the Income Tax Assessment Act 1997. This means that the majority of capital items used in a business will be eligible for the Tax Break.

The provision of additional incentives for small business recognises the vital role they play in the economy.

All other taxpayers will be able to claim a bonus deduction of 30 per cent of the cost of an eligible asset that they contract for, or start to construct, between 13 December 2008 and 30 June 2009, provided they start to use or have the asset installed ready for use by 30 June 2010.

Those that cannot meet the 30 June 2009 deadline may still be entitled to a bonus deduction of 10 per cent of the cost of an eligible asset they contract for, or start to construct, after this date and before 31 December 2009. They must start to use the asset or have the asset installed ready for use by 31 December 2010.

The process for taking advantage of the Tax Break is administratively simple - it will just be an additional deduction which is claimed in the business’ annual tax return.

Full details of the amendments in this bill are contained in the explanatory memorandum.

Question agreed to.

Bill read a second time.