Eligible companies should take advantage of this tax incentive, before it expires
The temporary full expensing (TFE) tax incentive is designed to allow eligible businesses to immediately deduct the full cost of eligible capital assets from their profits for the year, instead of spreading the deduction over several years through depreciation. This incentive is available for assets that are first used or installed from 7:30 pm AEDT on 6 October 2020 until 30 June 2023, and the threshold for this incentive is up to $150,000.
You can now buy equipment for your business; upgrade existing equipment and you can even buy second-hand equipment under certain circumstances. And it is still valid up to $150k.
It is important for businesses to take advantage of this incentive before it expires, as it provides a significant benefit to businesses that invest in eligible capital assets. By claiming the full deduction in the same year that the asset is acquired and put to use, businesses can effectively reduce their taxable income and save on tax expenses. It's important for businesses to consult with their tax professionals to ensure eligibility and to take full advantage of this temporary tax incentive.
The three temporary tax depreciation incentives available to eligible businesses are:
- temporary full expensing
- instant asset write-off
- backing business investment
To briefly summarise these:
- Temporary Full Expensing (TFE): This allows eligible businesses to deduct the full cost of eligible capital assets from their profits for the year, rather than depreciating the cost over several years. This is valid for assets acquired and first used or installed between 7:30 pm AEDT on 6 October 2020 and 30 June 2023, and the threshold is up to $150,000.
- Instant Asset Write-Off (IAWO): This allows eligible businesses to immediately deduct the business portion of the cost of eligible assets that cost less than the threshold. The threshold for the IAWO is up to $150,000 for assets acquired and first used or installed between 12 March 2020 and 30 June 2022.
- Backing Business Investment (BBI): This allows eligible businesses with an aggregated turnover of less than $5 billion to claim a deduction for the cost of new eligible depreciating assets at an accelerated rate. This is valid for assets acquired from 7:30 pm AEDT on 6 October 2020 and first used or installed by 30 June 2023.
Here is the information link, to check your eligibility, thresholds, exclusions/limits and deductions. Businesses interested in taking advantage of these incentives should consult the website of the Australian Taxation Office (ATO) for up-to-date information on eligibility, thresholds, exclusions/limits, and deductions.
Contact us at Hylec Controls to get a quote and to confirm the estimated time of arrival for installation.
Given that the temporary full expensing (TFE) tax incentive is set to expire on 30 June 2023, it is important for businesses to act quickly to take advantage of the opportunity. It's a good idea to plan ahead and start the process of purchasing and installing the machinery as soon as possible to ensure that it is in place and eligible for the TFE tax incentive before the deadline.