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Tax Incentives for Australian Businesses

7th of June 2021

Small and medium businesses can take advantage of the large asset write-off scheme in 2021.

The temporary full-expensing plan allows practically all Australian Small and Medium businesses to immediately write-off the full value of all new assets, with no limits on the amount of money they can spend on individual purchases.

The scheme was supposed to end on June 30, 2022, but it is extended until June 30, 2023.

So, how does the new "instant expensing" method operate, and which companies qualify? 

Here's everything you need to know about it.

tax incentives for australian business

Unlimited Instant Asset Write Off

All new assets are eligible under the scheme as long as they match the existing depreciable asset standards.

Computers, Printers, Hard Disk Drives and NAS, Business Phones, CCTV & Security Cameras, Networking Devices, Switches, and Computer Monitors are some of the examples.

The government has also verified that the value of new assets that can be claimed has no limit.

This is in contrast to the current instant asset write-off scheme, which has a $150,000 purchase limitation.

Who is eligible for the new scheme?

All Australian businesses with annual turnover of up to $5 billion are eligible for the new asset write-off measure.

This means that the scheme will be available to 99 percent of firms (about 3.5 million), with only the largest Australian enterprises being excluded.

What does it enable my company to do?

Businesses can claim the full value of all new qualified depreciable assets of any value that are first utilised or installed before June 30, 2023 under this scheme.

Businesses will now be entitled to deduct the full cost of upgrades made to depreciable assets already in use.

The plan is essentially an enhanced accelerated depreciation scheme that allows firms to claim a tax credit for the full cost of a purchase when it has been used, rather than depreciation amounts spread out over several years.

The goal is to encourage businesses to invest in new assets sooner rather than later by allowing them to claim the entire tax credit up front, lowering their tax bill.

This new scheme is a one-time measure that will last until June 30, 2023, after a 12-month extension was proposed in the government budget for 2021.

This means that if a company wants to claim under the scheme, the assets must be installed and operational by June 30, 2023.

For the latest official information, eligibility and requirements please check this fact sheet from the Federal Government:

https://budget.gov.au/2021-22/content/factsheets/download/factsheet_tax.pdf

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