Temporary Full Expensing

What is temporary full expensing?

Temporary full expensing is a temporary tax incentive introduced by the Australian government as part of its COVID-19 economic recovery plan. It allows eligible businesses to immediately deduct the full cost of certain assets in the year they are first used or installed ready for use.

Which businesses are eligible for temporary full expensing?

Businesses with an annual turnover of less than $5billion are eligible for temporary full expensing.

It is important to note that turnover does not include GST, proceeds from sale of capital assets or certain government grant income such as Jobkeeper.

Which assets are eligible for temporary full expensing?

Any assets that can usually be depreciated are eligible to be fully deducted under temporary full expensing, such as: Motor vehicles, factory machinery, office equipment and any other business equipment or assets.

This incentive also applies to second hand assets, although the business must have a turnover of $50m or less (Let’s be honest, that is most of us)

Which assets are not eligible for temporary full expensing?

·       Assets based primarily outside of Australia

·       Assets depreciated via low value pool or software development pool

·       Building and renovations to buildings which are considered structural and therefore subject to Division 43 rules.

·       Certain assets used for primary production such as water facilities and horticultural plants.

Car Limit

Regular motor vehicles are subject to a limit of $64,741 for temporary full expensing in the 2023 financial year.

This limit is exclusive of GST.

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When does an asset have to be purchased for temporary full expensing?

Assets have to be acquired from 6 October 2020 and first used or installed ready for use by 30 June 2023 to be eligible.

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Need help with depreciation issues anywhere in Australia?

CTK Accounting is an accounting firm based in Wollongong, servicing clients nationally.

You can reach us on our contact page.

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