Instant Asset Write Off & Temporary Full Expensing Schemes
11 October 2021
Instant Asset Write Off (IAWO) and Temporary Full Expensing (TFE) schemes provide benefits to businesses
IAWO extended and changes in the eligibility criteria, now is an opportune time for businesses to look at updating their plant and equipment.
Take advantage of the IAWO and TFE schemes
In a bid to stimulate business investment in the wake of the economic fallout from COVID-19, the Commonwealth Government introduced further easing of the eligibility for the IAWO and increased thresholds. TFE tax depreciation incentive was also introduced on 6 October 2020.
The IAWO allows eligible businesses, with an aggregated turnover of less than $500 million, to claim an immediate deduction for the business portion of the cost of an asset in the year the asset is first used or installed for use.
TFE allows an eligible business, with an aggregated turnover of less than $5 billion, to claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed for a taxable purpose. TFE applies to new depreciable assets and the cost of improvements to existing eligible assets.
Business owners should consult their tax accountants for full details, exclusions, limits, requirements and eligibility for the incentives.
The Federal Budget 2021-22 saw the announcement that the schemes would be extended until 30 June 2022 (subject to enacting legislation being introduced into Parliament).
Changes to the schemes
INVESTING IN NEW ASSETS
Eligible businesses with an aggregated turnover of less than $5 billion (previously $500 million) can apply.
$150,000 cap for each asset has been removed – no limitations on the value of newly purchased assets.
Depreciating assets must be installed and ready for use between 7.30 pm AEDT on 6 October 2020 and 30 June 2022.
No limitations on how many assets can be purchased.
INVESTING IN SECOND-HAND ASSETS
Eligible businesses with an aggregated turnover of less than $50 million can apply.
$150,000 cap for each asset has been removed.
Depreciable assets must be installed and ready for use between 7.30 pm AEDT on 6 October 2020 and 30 June 2022.
Eligible businesses with an aggregated turnover between $50 million and $500 million may be able to claim a full deduction for assets valued under $150,000 only if the purchase was made prior to 31 December 2020 and first used or installed by 30 June 2021.
No limitations on how many assets can be purchased.
Importantly, businesses may be able to secure finance to purchase the asset and still claim a deduction for the cost of eligible items. It is recommended that you speak with an Accountant before acquiring assets via the IAWO scheme.
For more information, contact us today
