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New Investment Threshold

To qualify for the allowance, the investment amount must exceed the relevant new investment threshold. The new investment thresholds are:

• $1,000 for small business entities; and
• $10,000 for all other taxpayers.

Small Business Entity

A taxpayer is a small business entity for an income year rather than at a point in time.

A taxpayer is a small business entity for the current income year if they carry on a business in that year and:

• they carried on a business during the previous income year and their aggregated turnover for that year was less than $2 million; and/or
• it is likely that their aggregated turnover is to be less than $2million for the current income year.

To qualify for the lower "new investment threshold", a taxpayer needs to be a small business entity for the income year in which they undertake new investment in an eligible asset, put that asset to use, or claim the allowance.

New Investment Amount

In determining whether the relevant new investment threshold has been met, the following points should be followed:

• The investment threshold is generally applied for each individual asset. Investments across a number of unrelated assets cannot be aggregated for the purpose of meeting the threshold.
• For jointly held assets, all interests in the asset are recognised for the purpose of meeting the relevant threshold.
• Only capital amounts are included. This is generally the cost to hold the asset (e.g. purchase price, installation costs) and any other costs incurred after purchasing the asset to bring it to its present condition (e.g. a new tray and canopy that is added to a Ute after purchase).
• Amounts that are outright deductible cannot be included (e.g. general repairs and maintenance).
• Multiple investments in the same, individual asset may be aggregated in meeting the new investment threshold. The investments need not be in the same year provided the allowance has not already been claimed on a previous amount.
• Once the threshold has been met in relation to an individual asset, the allowance will be available for all subsequent investments in the asset that are completed on or before 31 December 2009.
• The investment amounts must be GST exclusive.

Batches and Sets of Assets

Notwithstanding the general rule, a taxpayer is permitted to aggregate investment in assets that are identical, or substantially identical, and in assets that form a set for the purposes of meeting the threshold.

The taxpayer will still need to consider each asset individually. The assets forming the "batch" or the "set" still need to be new tangible, depreciating assets and the criteria around the timing of an investment in each asset still applies. That is, aggregation across batches and sets of assets only applies for threshold purposes.

Whether assets form a set will need to be determined on a case by case basis. Items may be regarded as a set if they are dependent on each other, marketed as a set, or designed and intended to be used together.

The concept of a set requires more than one depreciating asset. In some cases, however, more than one item makes up a single depreciating asset. An example would be a three volume dictionary. This is a single depreciating asset, not a set of three separate depreciating assets as the three volumes have a single integrated function. Similarly, a computer - consisting of a hard drive, monitor and mouse - would not be considered to be a set, as it forms a single composite asset (with the components naturally aggregated for threshold purposes).

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