The temporary full expensing scheme is a tax incentive introduced by the Australian Government designed to bring forward spending and help businesses recover from the impacts of COVID-19.

Below we look at how the scheme works and how it may benefit your business.

What is temporary full expensing?

Temporary full expensing is a government incentive that allows eligible businesses to deduct the full cost of any eligible depreciating asset, of any value, in the year they are first used or installed ready for use.

How does it work?

The asset needs to be purchased and installed within the time specified. To be eligible for the incentive, a depreciating asset must be:

• first held, and first used or installed ready for use for a taxable purpose, between 7.30 pm (AEDT) on the 6^th of October 2020 and the 30^th of June 2022; and
• be located in Australia and principally used in Australia for the principal purpose of carrying out business.

As a part of the 2021-22 Federal Budget, the Australian Government announced they will extend the scheme for an additional year to the 30^th of June 2023, although this is not yet law.

Who is eligible?

Any business with an aggregated turnover of less than $5 billion is eligible for the scheme.

For businesses with an aggregated turnover of less the $50 million, the scheme also applies to the business portion of eligible second-hand depreciating assets.

What can I claim?

You can claim the cost of any asset required for your business, including but not limited to the following:

• Business Vehicles
• Commercial Vehicles
• Heavy Machinery
• Commercial Equipment
• Computers and Office Equipment
• Tools
• Farm Machinery

Some assets such as capital works and assets allocated to a software development pool are excluded.

How will the scheme benefit my business?

The ability to claim accelerated depreciation on eligible assets can offer businesses excellent tax incentives. Reducing the amount of tax your business is paying can have a positive effect on your cash flow helping to maintain healthy business growth.

If you are ready to upgrade your equipment or expand your fleet, taking advantage of the temporary full expensing scheme makes smart business sense and will help to fuel your future growth.

To find out more information about temporary full expensing visit the ATO website.

If 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 who will be able to assist you in finding the best facility for your needs and budget.