Temporary Full Expensing
Temporary full expensing is a tax provision that allows businesses to fully deduct the cost of eligible depreciating assets in the year they are purchased or first used, rather than depreciating the asset over several years. This measure was introduced in response to the economic impacts of the COVID-19 pandemic, as a way to encourage businesses to invest in new assets and support economic growth.
It was always intended to only be a temporary measure and the end date of 30 June 2023 is now approaching. From 1 July 2023, businesses will no longer be able to immediately deduct the full cost of eligible assets over $1,000, based on current law (noting that large businesses have a lower threshold). Instead, they will need to depreciate the cost of the asset over a number of years, in accordance with the relevant tax rules.
The upcoming Federal Budget, to be delivered in May, may introduce new rules that could provide businesses with some form of immediate depreciation deduction after 30 June 2023. However, we do not know yet what these new rules may be, if any.
We will have details of the relevant changes included in the Federal Budget when it is delivered and will be in touch with our usual year-end tax planning tips in the coming months.
If you would like to discuss how your business may still benefit from the temporary full expensing tax measure in the next three months to 30 June 2023, please give us a call.