Maintaining a positive cash flow within your business is important to maintain healthy growth, but it can be rather tricky if you are purchasing large assets and equipment for your business.
What is temporary full expensing?
Temporary full expensing is a government incentive that allows eligible businesses to deduct the full cost of any eligible depreciating asset, of any value, in the year they are first used or installed ready for use.
How does it work?
The asset needs to be purchased and installed within the time specified.
To be eligible for the incentive, a depreciating asset must be:
- First held, and first used or installed ready for use for a taxable purpose, between 7.30pm (AEDT) on October 6, 2020 and June 30, 2023; and
- Be located in Australia and principally used in Australia for the principal purpose of carrying out business.
As a part of the 2021-22 federal budget, the Australian government announced they will extend the scheme for an additional year to June 30, 2023, although this is not yet law.
Who is eligible?
Any business with an aggregated turnover of less than $5 billion is eligible for the scheme.
Plus, for businesses with an aggregated turnover of less the $50 million, the scheme also applies to the business portion of eligible second-hand depreciating assets.
What can I claim?
You can claim the cost of any asset required for your business, including but not limited to the following:
- Business vehicles
- Commercial vehicles
- Heavy machinery
- Commercial equipment
- Computers and office equipment
- Farm machinery
Some assets such as capital works and assets allocated to a software development pool are excluded.
How will the scheme benefit my business?
The ability to claim accelerated depreciation on eligible assets can offer businesses excellent tax incentives.
Reducing the amount of tax your business is paying can have a positive effect on your cash flow helping to maintain healthy business growth.
If you are ready to upgrade your equipment or expand your fleet, taking advantage of the temporary full expensing scheme makes smart business sense and will help to fuel your future growth.
Is your business eligible to benefit from the temporary full expensing scheme?
Morris Finance has put together the key points of the scheme to help you make sense of it all.
- Have an annual turnover of up to $5 billion
- First use or install the asset between October 6, 2020, and June 30, 2023
- It can be a new. or second-hand asset
- The asset must be installed and ready to use in the financial year that you wish to claim it in
- The asset value is uncapped, and the scheme can be used multiple times
- The assets you can claim include business vehicles, construction equipment, light and heavy commercial vehicles, computer and office equipment and more
This information comes from Morris Finance, which is one of Australia’s leading national finance companies, providing asset finance, investment, leasing and insurance services to ABN holders; registered companies; individuals and sole traders.
Simply call 1300 4 Morris and speak to one of their finance specialists, or email firstname.lastname@example.org, and the team will be able to assist you in finding the best facility for your needs and budget.