Introduced in the 2020-21 Budget and now extended until 30 June 2023, this measure 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.
Temporary full expensing enables your business to fully expense the cost of:
- new depreciable assets
- improvements to existing eligible assets, and
- second-hand assets
in the first year of use.
Exclusions
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.
Loss carry back rules
For companies, it is important to note that the loss carry back rules have not yet been extended.
The loss carry back rules allow some companies to apply current year losses against taxable profits in prior years and claim a refund of the tax that has been paid. At this stage the loss carry back rules are due to expire at the end of the 2022 income year.
What the Legislation covers
The Legislation extends the rules to cover assets that are first used or installed ready for use by 30 June 2023.
We will contact clients regarding the incoming guidance. If you are concerned about your position, please contact us.
