Instant Asset Write Off – Ending Soon

words by Mark

Do you have equipment on order or are you looking to purchase new gear soon? 

We encourage businesses to chat to their finance brokers and accountants on how to take advantage of the government instant asset write off. With these ending in just under six months, there’s potential for businesses to see significant savings with some strategic planning.

Learn more about how the instant asset write off could work for your business. 

Temporary full expensing of depreciating assets (TFEDA)

The Government is supporting businesses by enabling them to deduct the cost of eligible capital assets acquired from Budget Night 2020 and first used by 30 June 2023.

Full expensing in the year of first use will apply to new depreciable assets and the cost of improvements to existing eligible assets. For SMEs (with turnover less than $50 million per annum), full expensing also applies to second-hand assets. See Table 1 below.

Government Tax Incentives Ending EOFY 2023

As part of the instant asset write off, small businesses can deduct the balance of their simplified depreciation pool at the end of 2021, 2022 and/or 2023. The provisions which prevent small businesses from re-entering the simplified depreciation regime for five years if they opt-out, will continue to be suspended.

Table 2 is a simple summary of the Loss Carry Back opportunities, as announced in the Federal Government’s 2020 Budget.

Instant Asset Write Off. Temporary Loss "Carry Back" Incentive Table

Temporary Loss “Carry Back” opportunities

The Government will allow eligible companies to carry back tax losses from the 2019-20, 2020-21, 2021-22 or 2022-23 income years to offset previously taxed profits in years later than 2018-19.

Corporate tax entities with turnover less than $5 billion per annum can apply tax losses against taxed profits in a previous year, generating a refundable tax offset in the year in which the loss is made. The tax refund would be limited by requiring that the amount carried back is not more than the earlier taxed profits and that the carry back does not generate a franking account deficit.

The tax refund will be available on election by eligible businesses when they lodge their tax returns for 2020-21, 2021-22 and 2022-23 income years.

Currently, companies are required to carry losses forward to offset profits in future years. Companies that do not elect to carry back losses under this measure can still carry losses forward as normal.

A conversation with a finance broker and accountant will benefit those making capital purchases in the near future.


Want to learn more? Contact us. 

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