2022 TA Temporary Full Expensing of Depreciation 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 2022. Unlike prior rules on instant asset
Announcement (6-Oct-2020)
write-offs, no limit applies to the cost of an asset under the full expensing rules. That is, an asset of any
Consultation (6-Oct-2020)
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. Since the legislation has been enacted, further amendments will be made to the laws to allow businesses a choice in using full
Intoduced (7-Oct-2020) Passed (9-Oct-2020) Royal Assent (14-Oct-2020 Date of effect (6-Oct-2020)
expensing or not. In certain situations, it may be beneficial to spread out tax deductions over multiple years. Also, certain large entities will have separate eligibility criteria.
Accelerated Depreciation via Backing Business Investment Businesses with less than $500 million in aggregated turnover can accelerate depreciation deductions for new assets in the 2019-20 and 2020-21 income years. Accelerated depreciation rules for these entities have subsequently been superseded by new ‘temporary full expensing’ legislation in November 2020. However, the option to use accelerated depreciation continues. Accelerated depreciation is available for assets in the first year the asset would ordinarily claim a deduction. In the first year a deduction is allowable for 50% of the installed cost of the asset plus regular depreciation rates for the remainder. The Backing Business Investment measures are in concert with the extension of the instant asset write-off.
Announced: 11-Mar-2020 Updated: 7-Dec-2020
However, it may only be relevant for some clients until 6 October 2020, when the full expensing regime commenced. Small businesses using pooling can use a 57.5% write-off for assets purchased after 12 March 2020 that do not qualify for immediate write-off in the 2019-20 income year. Small business entities are also covered by the new full expensing legislation.
Instant Asset Write-off - COVID-19 Tax Stimulus Package The instant asset write-off will be available for the majority of businesses during some part of the 201920 and 2020-21 income years. For purchases between 12 March 2020 and 6 October 2020, businesses under $500 million in turnover can get an immediate tax deduction for assets costing less than $150,000. In the purchasing time frame, the asset needs to be first used or installed ready for use by 30 June 2021. In the legislation, the update also extends to the low value pool for the 2019-20 income year. An entity with a small business pool balance of less than $150,000 will be able to write off the entire balance (up
Announced: 11-Mar-2020
from $30,000). For the 2020/21 income year, general small business depreciation pools may be written
Updated: 7-Dec-2020
off in full in accordance with the full expensing rules. The government stimulus package, announced to prevent a large national economic downturn, includes this boost to instant asset write-offs. However, the stimulus will not be received until lodgment of the tax return. Subsequent legislation introduced into parliament will allow businesses an option of using the instant asset write-offs or to depreciate new assets over their effective life.
Payment Times Reporting Scheme The Payment times reporting scheme is commencing 1 January 2021, providing small businesses with greater understanding of the corporate treasury management processes within large business. In the publicly available report, information about how quickly a big business pays a small business for goods and services is delivered. This can provide a small business a snapshot regarding how quickly they
Announcement (10-Oct-2020) Intoduced (13-May-2020) Passed (6-Oct-2020)
could expect payment for work with a big business, which may help decision making. Small businesses
Royal Assent (14-Oct-2020
also will have the option of opting out from the reporting scheme. This will mean that their identify as a
Date of effect (1-Jan-2021)
small business will remain unknown to a big business throughout the relationship.
