Home topics news News News Why businesses shouldn’t bother with the 50% investment allowance Adrian Raftery May 27, 2009 Well the Federal Budget came out last week and most pundits labeled it as a pretty tame affair particularly with respect to businesses. I have to agree. There was no change for large business and the only significant change for small business was the extension and increase of the Small Business Tax Break – from 30 percent to 50 percent bonus deduction to small businesses (i.e turnover under $2 million) for assets acquired between 13 December 2008 to 31 December 2009. The media have been raving about how great this measure is for small business. 50 percent extra deduction. Sounds great doesn’t it? Well I am not that excited for quite a few reasons as outlined below: 1. To enjoy the bonus deduction your business has to outlay extra cash to buy the assets. With times being tough, cash is king. Don’t forget my A-B-C motto of money matters – Absolutely Bloomin’ Cash – a business with poor cash flow is going to struggle in the coming months and years. Why put pressure on your cash flow if you don’t need to? I am predicting a lot of businesses will get their cash flow requirements wrong and get into strife, thus putting more pressure on the economy if businesses fail. 2. So let’s say that you want to preserve your cash, and you want to finance the purchase instead. If you