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.
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.
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.
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