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Temporary expensing of assets


The majority of businesses are eligible to claim an outright deduction for the cost and installation of new assets.

To qualify for full expensing, the asset must be first held and first used or installed ready for use between 7:30pm AEDT 6 October 2020 and 30 June 2023. This final date of temporary full expensing has been extended by 12 months from a 2021 Federal Budget announcement. Legislation is now in parliament for approval.

Unlike prior rules on instant asset write-offs, no limit applies to the cost of an asset under the full expensing rules.

Unlike prior rules on instant asset write-offs, no limit applies to the cost of an asset under the full expensing rules. That is, an asset of any value may be fully deducted in the appropriate income year.

For a business to qualify for the outright deduction, the entity must have an aggregated turnover of less than $5 billion. Certain large entities will have separate eligibility criteria.

Since the original legislation was enacted, further amendments have been made to the laws to allow businesses a choice in using full expensing or not. In certain situations, it may be beneficial to spread out tax deductions over multiple years. However, no such option exists for small business entities using pooling for depreciation as the entire balance will be written off each year full expensing applies.

Source: Treasury Laws Amendment (Enhancing Superannuation Outcomes for Australians and Helping Australian Businesses Invest) Bill 2021

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