The Australian Government first announced they would be increasing the Instant Asset Write-Off Scheme in March 2020 to $150,000, which saw a large spike in sales and stock shortages as consumers raced to take advantage of this never before seen incentive.
Due to the scheme’s overwhelming success, the government has since introduced the Temporary Full Expensing scheme, which serves as a limitless extension of the original incentive.
In short, the temporary full expensing scheme provides eligible businesses with the opportunity to immediately deduct the full cost of assets used for business purposes, simply reducing the amount of tax they have to pay.
How can this benefit your business?
The temporary full expensing scheme supports businesses and encourages growth and investment.
It applies to multiple assets and depending on the size of your business, it also applies to both new and used assets. Eligible assets are items that come with a limited life expectancy and that are expected to depreciate over time. This includes items such as tools, equipment, business vehicles, commercial vans, computers, office equipment and more.
Claiming these deductions in one lump sum, as opposed to claiming them over several years, can offer businesses excellent tax incentives. Reducing the amount of tax that your business is paying will have a positive impact on your cash flow, helping to support and maintain a healthy growing business.
There is also no limit on how many assets you can claim, therefore if you are looking to upgrade an entire fleet, you will be able to write off all the assets in the year that you purchased them. It is important to remember, you can only claim the portion of the asset that will be used for business purposes.
If your business has an annual turnover of under $5 billion but over $50 million, you can claim a full deduction for new assets only. If your turnover is less than $50 million, you are eligible to claim the full amount of both new and used assets.
The assets must be first held, and first used or installed ready for use for a taxable purpose, between 7.30 pm (AEDT) on the 6th of October 2020 and the 30th of June 2023, be located in Australia, and principally used in Australia for the purpose of carrying out business.
For businesses considering upgrading their equipment or expanding their fleet, making the most of the temporary full expensing scheme is a smart business move, helping to fuel future growth.
Are you ready to purchase a new asset, or upgrade your existing ones? Do you require assistance obtaining finance to take advantage of the temporary full expensing scheme? Contact our team of finance specialists today on (03) 5223 3453 to discuss how we can help you.
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