Expensing of Depreciable Assets

The 2020 – 2021 Federal Budget announced significant temporary changes to the tax rules surrounding depreciating assets. These new, full expensing rules apply to businesses with a turnover of up to $5 billion. An immediate 100% deduction can be taken for eligible depreciating assets incurred from 6 October 2020 until 30 June 2022.

Which assets are eligible?

A depreciating asset qualifies for full expensing if after 6 October 2020, and on or before 30 June 2022 the entity:

  • Starts to hold the asset; and
  • Starts to use the asset, or has it installed ready for use for a taxable purpose.

An asset is not eligible for full expensing if:

  • The capital allowances’? rules in Division 40 do not apply (i.e. if it is trading stock, a capital works asset or a CGT asset);
  • The asset is not used or located in Australia;
  • The expenditure is allocated to a low-value pool or a software development pool; or
  • The expenditure is deductible to the entity or another entity under the primary production depreciation rules in Subdivision 40.

There are several exceptions around these general rules and your Tax Specialist at 360Private will be happy to assist you in defining your Business eligibility, to ensure that your Business receives its full deduction.