The ATO introduced a tax incentive for businesses called temporary full expensing, which aimed to stimulate investment and help businesses recover from the economic impact of COVID-19.

Temporary full expensing allows businesses with an annual turnover of up to $5 billion to immediately deduct the full cost of eligible depreciable assets that are first used or installed between 7:30pm AEDT on 6 October 2020 and 30 June 2023. This means that businesses can claim the full cost of the asset as a tax deduction in the year of purchase, rather than claiming deductions over a number of years.

Eligible assets include new or second-hand assets, such as machinery, equipment, and vehicles. The assets must be used for income-producing purposes and be installed ready for use before the end of the 2022-2023 financial year.

Temporary full expensing applies to assets that were acquired after the announcement of the measure on 6 October 2020 and installed by 30 June 2023. Assets that were acquired before 6 October 2020 may still be eligible for instant asset write-off, which allows businesses to claim an immediate deduction for the cost of eligible assets valued at less than $150,000.

In conclusion, temporary full expensing is a valuable tax incentive for businesses, providing an opportunity to claim an immediate deduction for eligible depreciable assets. Businesses should consider taking advantage of the incentive to boost their cash flow and invest in their future growth.

If you need assistance on this matter, please contact our office at 03 9973 5905.