A proposal to offer $2.7 billion worth of temporary tax breaks to businesses is currently being considered by the Senate.

These tax deductions will be in addition to existing tax deductions.

The investment allowance will basically give businesses a “one off tax deduction” equal to 30 percent of the reported cost of eligible new equipment and motor vehicles.

For example, the purchase of a $100,000 machine would equate to an extra $30,000 tax deduction on top of existing depreciation deductions.

The tax saving on this would depend on the marginal tax rate of the individual business.

If it’s 30 percent, then it means an extra $9,000 in your pocket.

All this suggests there is “a small window of opportunity” for taxpayers to obtain the benefit.

With interest rates at 40 year lows, great deals on motor vehicles and farm machinery and an extra 30 percent tax deduction on the table, it may be time to act.

The main parts of the proposal are:

• For new assets only (second hand assets do not qualify).

• Demonstrator vehicles can qualify as ‘new’ assets, provided they have only been used for reasonable testing and trialling.

• The price of the asset must be in excess of $10,000 excluding GST (reduced to $1,000 if the business turnover is $2m or less per annum).

• Land and trading stock are excluded from the definition of depreciating assets and will not qualify.

• Tax deduction claimable in the income year in which the asset is installed ready for use.

• Leased assets will qualify - provided the asset is a new leased asset which a deduction is available under the current Division 40 provisions.

• Assets that already receive concessional capital allowance deduction (e.g. such as assets used for primary production depreciated under Division 40-F) will not qualify.

The finer details will be released when the legislation is forced through the Senate.