Australian Businesses have welcomed the extension of the government’s temporary full expensing scheme announced in the 2021-22 Federal Budget.
This measure was first announced in last year’s 2020 Budget and was due to expire on June 30th 2022 but will now be extended for a further 12 months, expiring on June 30th 2023.
Temporary full expensing allows businesses to immediately write-off the full value of all new assets, with no limits on individual purchases.
So how does the scheme work? Here is what you need to know.
Who is Eligible?
Approximately 3.5 million business will have access to the scheme (99% of business), with only the largest businesses in Australia being excluded.
It is available to any Australian business that records an annual turnover of up to $5 billion.
What does it allow my business to do?
Essentially, the scheme is a greatly expanded accelerated depreciation program, allowing businesses to claim a tax deduction for the total value of a purchase after its use as opposed to claiming the depreciation amounts over several years, with the aim to get businesses to bring forward spending on new assets and in so doing, reducing the amount of tax they pay.
Any depreciable asset first used or installed before June 30th 2023 will be eligible for the scheme, with businesses able to claim the full deduction for its cost. Businesses will also be eligible to claim full deductions for the cost of improvements they make to any existing depreciable assets.
What can I claim?
Providing they meet the existing criteria for depreciable assets, all new assets are eligible.
Examples of eligible assets may include forklifts, vans, trailers, trucks, tractors, manufacturing equipment, office equipment and more.
Unlike the previous $150,000 Instant Asset-Write Off scheme, there is no longer a cap on the value of the new asset.
Are there any exclusions?
There are a few types of assets that are excluded from the scheme, these include capital works, horticultural plants, assets allocated to a software development pool, buildings, and any other intangible assets such as goodwill and customer lists.
It is important for businesses to keep a record of all purchases made under the scheme, including when they made the purchase and the value. And if the asset is to be used personally, to only claim the portion of the value that is business-related.
To take advantage of the temporary full expensing scheme, your business will need access to funds to purchase any new assets.
If your business is ready to purchase a new asset or upgrade your existing one and requires assistance obtaining finance in order to make the most of the temporary full expensing scheme, contact Morris Finance today.
Simply call 1300 4 MORRIS and speak to one of our Finance Specialists or email email@example.com and our team will assist you in finding the best facility for your needs and budget.
More information regarding Temporary Full Expensing can be found in the link below.