The Australian Taxation Office (ATO) has published new guidance on how to claim temporary full expensing as part of the broader guidance on Temporary full expensing.
How to claim temporary full expensing
If your income years end on 30 June, deductions under temporary full expensing are only available in the 2020–21 and 2021–22 income years.
You claim the temporary full expensing deduction in your tax return for the relevant income year.
You can choose to opt out of temporary full expensing for an income year on an asset-by-asset basis and claim a deduction using other depreciation rules. However, you must notify us in your tax return that you have chosen not to apply temporary full expensing to the asset.
The choice is unchangeable and you must notify us by the day you lodge your tax return for the income year to which the choice relates.
Information you need
To claim a temporary full expensing deduction, you must complete the additional labels included in the 2020–21 and 2021–22 tax returns.
Why we ask
Information provided in these labels about to your eligibility and your claim will:
- help us administer the temporary full expensing measure
- inform future services and initiatives for business.
What we ask
The information that you will need to provide through additional labels in the tax return includes:
- whether you're making a choice to opt out of temporary full expensing for some or all of your eligible assets
- the number of assets you're opting out for (if applicable)
- the costs of assets you're opting out for (if applicable)
- the total amount of your temporary full expensing deduction
- the number of assets you're claiming temporary full expensing for
- whether you're using the alternative income test (corporate entities)
- your aggregated turnover.
Our approach when you amend your claim in certain circumstances
We understand that some entities may not have time to update their systems or review their asset registers to accurately reflect their temporary full expensing claim, and therefore may make an honest mistake when lodging their return.
We will not consider the lodgment of your original tax return as notice of a choice to opt out of temporary full expensing for some or all of your depreciating assets. We will accept that you have taken reasonable care provided you:
- lodge your first income tax return that becomes due after 6 October 2020 (the original tax return) no later than its due date
- act in good faith and use your best attempt to correctly calculate and correctly report your depreciation deduction in your original tax return
- have contemporaneous records to support that you did not have time to update your system or review your asset registers to correctly identify which assets temporary full expensing applies to before lodging your original tax return, and therefore calculated your depreciation deduction for those assets under the standard capital allowance rules
- have not completed the temporary full expensing opt-out question or either the value or number of assets opted out of temporary full expensing in the capital allowances section of your original tax return
- amend your claim no later than three months after the date of lodgment of your tax return (including providing the required temporary full expensing tax return information)
Generally, we will not apply compliance resources to review this specific aspect of your depreciation claim (including temporary full expensing). However, it will remain open to us to review other aspects of your depreciation claim (including temporary full expensing).