Decrease your businesses taxable income and buy the equipment your business needs

If your business turns over up to $5 billion (which is 99 per cent of all businesses in Australia) then you can immediately deduct the full cost of eligible depreciable assets of any value that were acquired from 4.30pm (AWST) 6 October 2020 and will be first used or installed by 30 June 2022.

The cost of improvements to existing eligible depreciable assets made during this period can also be fully deducted. This is a temporary tax incentive as part of the Federal Budget and in its response to Covid-19

The scheme allows you to fully write off new assets by claiming a tax deduction for the full value of a purchase (and remember this is any value, there are no limits) rather than claim its depreciation amount of several years. This will reduce the amount of tax you pay as the full tax deduction is claimed in that year.

The Government has coined the phrase ‘temporary full expensing’.

What’s the difference between the instant asset write off and this new scheme?

This new scheme is an expansion of the instant asset write off (which was already extended until 30 June 2021.) The difference is that it is now available to more businesses. Businesses with a turnover of up to $5 billion are now eligible, rather than up to $500 million, and it completely removes the $150,000 cost limit on the individual asset.

However, if you bought a piece of equipment for your business before 6 October 2020, then the instant asset write-off scheme would apply, which would mean a $150,000 cost limit.

What can be written off?

The Treasurer, Josh Frydenberg, gave a few examples:

  • A trucking company could update its entire fleet
  • A farmer can buy a new harvester
  • A food manufacturing business can expand its production line

You could also purchase new computers, office furniture, point of sale equipment, a new car for work purposes, tools, electrical items…anything that you might need for your business.

For small and medium sized businesses (with aggregated annual turnover of less than $50 million), full expensing also applies to second-hand assets.

As always, if you have any questions, please don’t hesitate to give us a call to chat through these new schemes available. Call us on 08 9240 7629 or send Chloe an email at admin@taxproaustralia.com.au and she will arrange for one of our expert accountants to give you a call back!

 

 

Fully write off new assets