Backing business investment – accelerated depreciation

Measures introduced in March 2020 provide an incentive to businesses with aggregated turnover of less than $500 million for the 2019–20 and 2020–21 income years, to deduct the cost of depreciating assets at an accelerated rate.

Eligible assets

The depreciating asset must:

  • Be new and not previously held by another entity (other than as trading stock).

  • Be first held on or after 12 March 2020.

  • First used or first installed ready for use for a taxable purpose on or after 12 March 2020 until 30 June 2021.

  • Not be an asset to which an entity has applied the instant asset write-off rules or depreciation deductions.


Eligible assets do not include:

  • Second-hand depreciating assets.

  • Some specific Division 40 assets subject to low value and software development pools.

  • Certain primary production assets.

  • Buildings and other capital works for which you can deduct amounts under Division 43.

  • The other specific capital asset and expense deductions.


Eligible businesses


Small business entity

You can deduct an amount equal to 57.5% (rather than 15%) of the business portion of a new depreciating asset in the year you add it to the pool. If you are a small business with:

  • An aggregated turnover of less than $10 million.

  • Use the simplified depreciation rules.

  • Assets over the instant asset threshold.


Other business entities

You may be eligible to deduct an amount if:

  • An aggregated turnover less than $500 million in the income year.

  • Do not use the simplified depreciation rules.

  • The asset is a qualifying asset.


The amount your entity can deduct in the income year the asset is first used or installed ready for use is as follows:

  • 50% of the cost (or adjustable value where applicable) of the depreciating asset.

  • Plus the amount of the usual depreciation deduction that would otherwise apply but calculated after first offsetting a decline in value of 50%.


Effectively, together with the instant asset write-off rules, the accelerated depreciation deduction applies to assets with a cost (or adjustable value if applicable) of:

  • $150,000 or more in the 2019–20 income year

  • $1,000 or more in the 2020–21 income year.


MORE INFORMATION:

For the latest advice, information and resources, go to https://www.ato.gov.au/

Feel free to contact us at office@gordondu-associates.com.au or (08) 9345 0499.


#gordonqcduandassociates #gordondu #stayathome #coranavirus #depreciation #deduct #assets

  • Facebook
  • Twitter

© Copyright 2022 Gordon Q C Du & Associates Pty Ltd  | All Rights Reserved