ALP policy on Australian Investment Guarantee

Jack Malarkey

Well-Known Member
Extracts from Australian Labor Party policy on its proposed Australian Investment Guarantee:

[L]abor will invest in a new Australian Investment Guarantee. Under Labor’s Australian Investment Guarantee, all businesses in Australia will be able to immediately deduct 20 per cent of any new eligible asset worth more than $20,000, with the balance depreciated in line with normal depreciation schedules from the first year.

Labor’s Australian Investment Guarantee is permanent – that means businesses can continue to take advantage of the immediate tax deductibility whenever they make a new investment in an eligible asset.

Labor supports ... extending the instant asset write off for small and medium businesses making investments less than $30,000...

The new Australian Investment Guarantee features the following scope and key design elements:

  • Eligible assets will include tangible machinery, plant and equipment for both upgrades and new purchases (for example, farm tractors and food processing machinery).
  • Depreciable intangible assets (often referred to as “knowledge assets”) which make up an increasingly larger component of non-mining investment will also be eligible (for example, patents and copyrights).
  • Investments in structures and buildings are excluded, consistent with previous accelerated depreciation policies used in Australia.
  • It will not apply to otherwise eligible expenditure currently claimed under the existing research and development tax concession.
  • It will not apply to passenger motor vehicles, but it will apply to non-passenger motor vehicles such as lorries, vans, utes and trucks that are used to support trade businesses. It would also apply to battery-powered electric vehicles.
  • It will only apply to eligible investments valued at over $20,000 (with no pooling of assets allowed) to ensure it is well-targeted at productivity-enhancing investments.
The Australian Investment Guarantee ...will be a permanent feature of the tax system...

(https://www.alp.org.au/policies/australian-investment-guarantee/)

[end of extract]

Jack Malarkey comments:

Note the exclusion for ordinary cars unless they are battery-powered electric vehicles.

Note also that there is a depreciation limit for cars. This limit is annually indexed.

The Australian Taxation Office has relevantly advised:

  • Cars and tax

    From 1 July 2018 the following car threshold amounts apply.
    Income tax
    There's an upper limit on the cost you use to work out the depreciation for the business use of your car or station wagon (including four-wheel drives). You use the car limit that applies to the year you first use or lease the car.
    The car limit for 2018-19 is $57,581.
    Goods and services tax (GST)
    Generally, if you purchase a car and the price is more than the car limit, the maximum amount of GST credit you can claim is one-eleventh of the car limit amount.
    You can't claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.
    Luxury car tax
    From 1 July 2018 the tax threshold for luxury cars increased to $66,331.
    The threshold for fuel efficient luxury cars for the 2018-19 financial year remains at $75,526.
    In general, the value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.
    Find out about:
(https://www.ato.gov.au/Newsroom/smallbusiness/Lodging-and-paying/Cars-and-tax/)
 
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