ATO recently announced Temporary full expensing for small businesses with turnover less than $5 billion.
What is Temporary full expensing?
It allows small business entities to immediately deduct the business portion of the cost of eligible new and second depreciating assets.
Who can be eligible?
Businesses with aggregated turnover of less than $5 billion and can claim the deduction when lodging their 2020–21 or 2021–22 tax return.
What is eligible?
Depreciating asset that are:
new or second-hand;
improvements to existing assets
first held by you at or after 6 October 2020; and
first used or installed ready for use by you for a taxable purpose (such as a business purpose) between 6 October 2020 and 30 June 2022;
What is excluded?
- assets allocated to a low-value pool or a software development pool
- certain primary production assets (water facilities, fencing, horticultural plants or fodder storage assets), unless you are a small business entity who chooses to use the simplified depreciation rules to these assets
- buildings and other capital works for which you can deduct amounts under Division 43
- assets that either;
will never be located in Australia
will not be used principally in Australia for the principal purpose of carrying on a business
Other Things to consider
Car limits apply to the cost of motor vehicles designed to carry a load less than one tonne and fewer than 9 passengers. The car limit is $59,136 for the 2020–21 income year. This means if you purchase a motor vehicle with a value greater than the car limit, the amounts above the car limit are ignored for tax and GST purposes.
ATO article Temporary full expensing | Australian Taxation Office (ato.gov.au)