Instant asset write-off
This allows eligible small businesses to claim an immediate deduction for the business portion of the cost of the asset first used or installed between 12 March 2020 and 30 June 2021 and purchased before 31 December 2020.
The threshold amount for each asset is $150,000. Only businesses with an annual turnover of under $500 million are eligible for the instant asset write-off.
Temporary full expensing
To help increase cash flow and encourage small business investment, the federal government has introduced and extended temporary full expensing. This applies to businesses with a turnover under $5 billion who have purchased new or second-hand assets. To qualify, the assets must have been purchased after 7.30pm AEDT on 6 October 2020 and by 30 June 2023 and be used for generating an income.
The temporary full expensing provisions allow for an immediate deduction of the full cost of eligible assets. In addition, businesses with a turnover under $10 million can claim the balance remaining in their company’s small business pool at the end of each income year during this period.
You can opt-out of temporary full expensing for an income year on an asset-by-asset basis if you are not using the simplified depreciation rules.
Simplified depreciation for small business
If you run a small business and use the simplified depreciation rules, you can apply the temporary full expensing rules with some modifications. Find out how to use the simplified depreciation rules.
Before making any big purchases, consider whether the asset will help grow your business. It’s best to seek professional advice to help you assess benefits to the business, and determine what impact it will have on your future finances and cash flow.