With the temporary full expensing incentive due to end on 30 June 2023, the federal government has announced the re-introduction of the small business instant asset write-off.
Businesses with an aggregated turnover of less than $5 billion
The Temporary Full Expensing rules provide for a full deduction of the cost of eligible depreciating assets in the year they are first used, or installed ready for use for a taxable purpose by 30 June 2023.
You will need to act now to avoid missing out on the write-off.
Assets must be installed ready for use, or be first used, by 30 June 2023. Merely entering into a contract to purchase is not sufficient to qualify for the write-off.
If your turnover is under $50 million, you can also get the write-off for second-hand assets.
Businesses with an aggregated turnover of less than $10 million
For small business entities using simplified depreciation, the cost threshold of an asset for instant write-off was set to revert to $1,000 until a re-introduction of the instant asset write-off was announced in the 2023–24 Federal Budget.
From 1 July 2023, small businesses with aggregated annual turnover of less than $10 million will be able to deduct the full cost of eligible assets immediately.
For you to be eligible to claim the instant asset write-off next year, the asset must:
The $20,000 threshold will apply on a per asset basis. This means that you will be able to write-off multiple assets.
Opportunities
With the Temporary Full Expensing incentive end date approaching, you should consider investing in depreciable assets before 30 June 2023.
First, determine whether the asset will benefit your business sufficiently to justify its cost. The lure of a big tax deduction might be tempting but if you buy solely to get the tax deduction you might be worse off in the longer term.
You can't have your cake and eat it too. Once you have claimed the full cost of the asset you will have no depreciation to claim in future years. You might later regret making the decision to deduct the full cost of the asset in the 2023 year. Consult your advisers.
You will still have the option to choose the instant asset write-off after 30 June 2023 if the eligible assets cost less than $20,000.
Tax Planning
The depreciation options are varied and complicated. Timing of depreciation deductions to get the maximum benefit requires forward planning. Some decisions cannot be undone after 30 June. it is prudent to consult your advisers in May or June each year.
Tell us your plans by contacting our office, and we will guide you through the best course of action available for your business.
Office Location
68 Ash Street, Barcaldine QLD 4725
Postal Address
PO Box 104, Barcaldine, QLD, 4725
Phone: 07 4651 1341
Email: admin@walshaccounting.com.au
ABN:
59 330 650 357
Clubs and Associations
Grant Applications