FULL EXPENSING OF DEPRECIABLE ASSETS RULES

Temporary full expensing

Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose

Eligibility:

A business with aggregate turnover less than $5b
A corporate tax entity that meets the alternative income test –

This applies to the 2020-21, 2021-22 and 2022-23 income years

The asset needs to be held, first used or ready for use from 7:30pm 06.10.2020 – 30 June 2023

For eligible second-hand assets, your business aggregate turnover also needs to be less than $50m

Also, improvements on eligible assets that were held prior to 06.10.20 can be fully expensed under this regime.

Loss Carry Back Tax Offset

If the expensing results in a tax loss, you may offset the loss against a prior year income tax return, which may possibly result in a cash refund for tax paid to the tax office in the income years 2018-2019, 2019-2020, 2020-21 and 2021-22 tax returns, or a reduced liability if you have not yet paid the tax debt.

Otherwise, you can carry it forward and to following years.

This is a brief overview – click on the links contained in this post to see more detail on requirements and limits (i.e. limit on depreciable cost of motor vehicle).