Say you’re looking to upgrade your work truck and factory machinery. Or maybe you need some new excavators or bulldozers for your construction business. 

You may benefit from temporary full expensing – a government tax depreciation incentive – so it’s worth tuning in.  

 In the past, a lot of business owners got excited about the instant asset write-off scheme and the prospect of being able to immediately write off the cost of eligible assets up to $150,000. 

Well, temporary full expensing is essentially a boosted version of the instant asset write-off scheme. It applies to more businesses and more assets. Unlike the instant asset write-off, there is no limit to the cost of eligible assets under full temporary expensing. Winner! 

Whether the instant asset write-off scheme or temporary full expensing applies depends on, 1) when you acquired the asset and, 2) when it was first used or installed. 

 

What is temporary full expensing?  

Businesses with an aggregated turnover of less than $5 billion may be eligible to use temporary full expensing.  

You can claim the cost of any eligible asset required for business purposes (e.g. a new or used car, computers, tools or equipment) as an immediate deduction in the year it is first held or used.  

The depreciating asset must be: 

• new or second-hand (second-hand assets can be claimed by businesses with an aggregated turnover below $50 million) 

• first held at or after 7.30pm AEDT on October 6, 2020 
• first used or installed ready for use for a taxable purpose between 7.30pm AEDT on October 6, 2020 and June 30, 2023. 

Businesses can also potentially deduct improvements to eligible assets incurred during the above timeframe, as well as to existing assets that would be eligible except that they were held before 7.30pm AEDT on October 6, 2020. 

 

Like to know more? 

You can find more information about temporary full expensing and the instant asset write-off on the ATO website. 

By claiming depreciation and applying temporary full expensing, you may be able to improve your cash flow, grow your business, and upgrade your assets at the same time. 

If you’d like to make the most of temporary full expensing before June 30 and want to discuss how to finance your purchase, get in touch. It’s also a good idea to seek independent tax advice from your accountant before proceeding.