May 25, 2023 Joel Hernandez
Time running out on Temporary Full Expensing
The current concession which allows businesses to claim an immediate deduction for unlimited capital expenditure will come to an end on 30th June 2023.
Temporary full expensing enables businesses to fully expense the cost of the following in the first year of use, subject to meeting the necessary conditions:
- new depreciable assets
- improvements to existing eligible assets, and
- second hand assets
Introduced in the 2020-21 Budget, this measure generally enables an asset’s cost to be fully deductible upfront rather than being claimed over the asset’s life, regardless of the cost of the asset. Some expenses are excluded including improvements to land or buildings that are not treated as plant or as separate depreciating assets in their own right. Expenditure on these improvements would still normally be claimed at 2.5% or 4% per year.
In order to qualify, an asset must be used or installed ready for use by 30th June 2023. It will not be enough simply to have committed to its purchase or to have paid for it in full.
While the recent budget announcement of an immediate write off for capital purchases of less than $20,000 will help business, this new measure is confined to businesses with an aggregated turnover of less than $10m.
If you need further information, please contact our office.
