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ATO Provides Guidance on Claiming Temporary Full Expensing — Orbitax Tax News & Alerts

The Australian Taxation Office (ATO) has published guidance on claiming temporary full expensing.

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Claim temporary full expensing this tax time

If you're thinking about claiming temporary full expensing (TFE) for your business, it's important to make sure you're across all the requirements.

TFE provides an immediate deduction on the business portion of the cost of eligible depreciating assets, and the cost of improvements to eligible depreciating assets from 6 October 2020 to 30 June 2022.

Who is eligible?

Businesses with an aggregated turnover of less than $5 billion can access TFE. The rules for calculating aggregated turnover follow the same structure as those used for small business entity concessions.

Corporate tax entities unable to meet the $5 billion aggregated turnover test may be eligible if they meet the requirements of the alternative income test.

Which assets can I claim?

Assets must be new and first held by you at or after 7.30pm (AEDT) on 6 October 2020 and installed ready to use for a business purpose between 7.30pm (AEDT) on 6 October 2020 and 30 June 2022.

If your business has an aggregated turnover of less than $50 million, you can also claim for second-hand assets.

Small businesses using simplified depreciation rules

If you're a small business using the simplified depreciation rules:

  • You are unable to opt out of TFE for assets that the simplified depreciation rules apply to.
  • Assets that are deducted under TFE are not added to your small business pool.
  • You must also deduct the balance of your small business pool at the end of the income year ending between 6 October 2020 and 30 June 2022.

There are various tax depreciation incentives available. If you're unsure which may be right for you, use our infographic for a breakdown of the interaction of the different tax incentives.

See also:

Temporary full expensing

Interaction of tax depreciation incentives infographic

Alternative income test

Instant asset write-off for eligible businesses

Small business pool