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Thursday, 9 December 1976

Mr Young asked the Treasurer, upon notice:

Why have businesses in the equipment rental field been excluded from the benefits of the 40 per cent investment allowance purportedly designed to encourage investment in new equipment

Mr Lynch - The answer to the honourable member's question is as follows:

The investment allowance, which provides a strong encouragement to business to re-equip and expand by investing in new productive plant, is designed to assist industry to become more efficient and productive, thereby lifting the level of activity in the economy and creating more job opportunities.

It seeks to achieve this by reducing the cost of investing in new business plant and, consistent with its objective, is directed to the actual productive user of plant, whether an owner-user, hire purchaser or a long term lessee.

To extend the allowance to plant owned by hire firms would change the underlying concept of the investment allowance because the benefits of the allowance would go to the owner of hired plant and not the productive user who, as a short term hirer, could not be treated as having invested in new plant. Further, the allowance would be available for plant used other than wholly for business purposes. In effect, a subsidy would be made available through the income tax system for plant and equipment which could be used by casual or short term hirers for private, domestic or pleasure purposes.

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