As part of the Australian Federal Government’s 2020 budget, business tax package (JobMaker), the previously available Instant Asset Write-off initiative -that applied to assets purchased prior to 31st December 2020 and first used before 30th June 2021- has evolved to become JobMaker – Temporary full expensing to support investment and jobs.
The fundamentals remain the same, with Australian businesses able to claim an immediate tax deduction for investments, rather than over time through depreciation.
On 6 October 2020, as part of the 2020–21 Budget, the government announced that it will target support to businesses and encourage new investment, in part through a temporary full expensing incentive.
Eligible businesses with an aggregated turnover of less than $5 billion can deduct the full cost of new eligible depreciating assets that are first held, and first used or installed ready for use for a taxable purpose, between 7:30pm AEDT on 6 October 2020 (the 2020 Budget time) and 30 June 2022 2023 (Extended, 21-22 Federal Budget). For small and medium sized businesses (with aggregated turnover of less than $50 million), full expensing also applies to eligible second-hand assets.
Businesses can also deduct the full cost of improvements made during this period to depreciating assets, whether those assets were acquired before or after the 2020 Budget time.
This benefit only applies to assets you have purchased, which precludes any assets acquired using traditional commercial finance solutions such as Rental or Finance Lease. You may be able to take advantage of this incentive via a 3E Advantage Instalment Purchase Agreement. This will allow you to benefit from the full expensing measure while paying for your asset via fixed payments over a pre-determined term.
Key Points
- Eligible for businesses with an aggregated turnover of less than $5 billion
- Eligible depreciating assets that are first held, and first used or installed between 7:30pm AEDT on 6th October to 30th June
20222023 (Extended, 21-22 Federal Budget) - For Eligible business with aggregated turnover of less than $50 million, full expensing applies to eligible second-hand assets.
As always, please speak to your tax advisor to understand how these initiatives apply to your business.
Talk to one of our team now about taking advantage of the initiatives via our Instalment Purchase Agreement or fill out the form below and we will be in contact to discuss your requirements.