The Government has created the Backing Business Investment arrangement that allows businesses with a turnover of less than $500 million to claim depreciation of new business assets at a faster rate in your tax return.

Businesses who are eligible for the 2019-20- and 2020-21 income years, may find they are able to deduct costs of new depreciating assets at a faster rate.

For each asset that is new, the backing business investment accelerated depreciation deduction is applied in the income year that the asset is first used or installed ready for use for a taxable purpose. 

Eligibility

Businesses that are eligible for the investment must have an aggregated turnover of less than $500 million in the year they are claiming the deduction.

In order to be eligible, the depreciating asset must:

• Be new and not previously held by another entity (other than as trading stock)
• Be first held on or after 12 March 2020
• First used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021
• Not have had either of the following applied
  • Temporary Full Expensing
  • The Instant Asset Write-Off rules

Eligible assets do not include

• Second-hand depreciating assets
• Some specific Division 40 assets subject to low value and software development pools
• Certain primary production assets, unless you are a small business entity that chooses to apply the simplified depreciation rules to these assets
• Buildings and other capital works for which you can deduct amounts under Division 43
• Assets that will
  • Never be located in Australia
  • Not be used principally in Australia for the principal purpose of carrying on a business 
• Other specific capital asset and expense deductions
• Assets you were committed to acquiring before 12 March 2020

How to claim

The Backing Business Investment can be claimed when lodging your tax return for the income year.

For further information on eligibility and how to apply, click here.

Contact our team on 1300 4 MORRIS and speak to one of our finance specialists to see how we can assist your business.