Investment allowances for Australian manufacturers

Abstract

An investment allowance is a fiscal policy measure introduced by a government to encourage certain types of private investment expenditure. In the form adopted in the United Kingdom from 1954 until replacement in 1966 by a system of direct cash grants, and in Australia from 1962 until the allowance was suspended in 1971, an investment allowance permits a deduction in calculating taxable income of individual firms in the year in which new plant and equipment are installed of an amount equal to some percentage of the cost of certain plant and equipment. In Australia the allowance has been at a rate of 20%, but in the united Kingdom it has been as high as 40%. Show more