The ATO has just released statistics on work related expense claims during last year.
As a business owner, you're always looking for ways to save money and grow your business. One way you can do this is by taking advantage of the Australian Taxation Office's (ATO) temporary full expensing scheme before it expires on 30 June 2023.
What is Temporary Full Expensing?
Temporary full expensing is a tax incentive introduced by the Australian government to help businesses recover from the impact of the COVID-19 pandemic. It allows eligible businesses to claim an immediate deduction for the full cost of eligible depreciating assets in the year they are installed or first used for taxable purposes.
This means that businesses can claim a deduction for the full cost of the asset in the year they buy it, rather than depreciating the asset over a number of years. This can be a significant tax saving for businesses, particularly those investing in expensive machinery or equipment.
Who is Eligible for Temporary Full Expensing?
Temporary full expensing is available to Australian businesses with an aggregated turnover of less than $5 billion. Eligible assets must have been acquired from 6 October 2020 and first used or installed by 30 June 2023.
There are some exclusions to the types of assets that can be claimed under temporary full expensing. These exclusions include:
- Assets that are leased out to other parties
- Second-hand assets
- Buildings and capital works
- Certain intangible assets
How Does Temporary Full Expensing Work?
To take advantage of temporary full expensing, businesses must first purchase an eligible asset. This can include things like:
- Plant and equipment
- Computers and software
- Furniture and fittings
- Motor vehicles
- Buildings and structural improvements
Intangible assets such as patents, trademarks, and copyrightsOnce the asset has been purchased and installed, the business can claim a tax deduction for the full cost of the asset in the same financial year. This can provide a significant tax saving for businesses, particularly for those who have made large investments in equipment or machinery.
It's important to note that temporary full expensing is a temporary measure and is only available for assets that are first used or installed by 30 June 2023. After this date, businesses will revert to claiming deductions for the cost of assets over a number of years.
Temporary full expensing is a valuable tax incentive that can help Australian businesses save money and grow. By allowing businesses to claim an immediate deduction for the full cost of eligible assets, temporary full expensing can provide a significant tax saving for businesses of all sizes.
If you're a business owner, it's worth considering whether temporary full expensing could benefit your business.
Contact us to find out more about how temporary full expensing works and whether your business is eligible.
This blog has been prepared for the purposes of general information and guidance only. It should not be used for specific advice or used for formulating decisions under any circumstances. If you would like specific advice about your own personal circumstances, please feel free to contact us on 02 9411 5422. We can help make sure the right method is used to give you the maximum possible tax deduction associated with any of these methods.
