Are you aware of the upcoming changes to the current Temporary Full Expensing regulations and what this means for your business? If not, here is everything you need to know!
Navigating Australian tax laws and regulations can be tricky, especially when it feels like the rules are ever-changing. One of the more significant changes for Australian businesses to be aware of this year is the expiration of the current Temporary Full Expensing policy.
What is Temporary Full Expensing?
From March 12th 2020 to June 30th 2023, businesses will be able to claim an immediate deduction for the full cost of eligible assets acquired during this period. To be eligible for the Temporary Full Expensing, businesses need to have an aggregated turnover of less than $5 billion and the asset must be used for taxable purposes in the course of carrying on a business. This includes new assets as well as second-hand assets, provided they are acquired from an unrelated party. The asset must also first be used or installed and ready for use within the prescribed timeframe, and the entity claiming the deduction must hold the asset at the end of the income year in which the deduction is claimed.
What are the Benefits of Temporary Expensing?
Temporary Full Expensing has provided a great opportunity for businesses to lower their taxable income and get a cash flow boost by claiming the full deduction upfront.
Normally, for any asset costing more than $100, the business cannot claim the full cost as a business deduction in the year it was acquired, but rather the business claims a portion of the costs through the effective life of the asset (depreciation). This means the business will receive the tax benefit of the cost of the asset over a number of years. However, with Temporary Full Expensing, you can claim the full cost of the asset in the same year the cost was incurred to your business.
As a Business Owner, what do I need to do before June 30th?
Because the new asset needs to be installed and ready for business use prior to June 30th, time is running out to take advantage of full expensing.
Due to global supply chain shortages, it’s becoming increasingly important to plan ahead and make sure your new asset is installed and ready for use, as you will not be able to claim the deduction on any assets purchased and/or installed after June 30th, 2023.
How Can Hoffman Kelly Help You?
If you want to capitalise on this great opportunity and get some financial relief for your business, it’s important to seek out expert advice before you apply for the deduction. Consulting with a qualified accountant or tax advisor can help you to ensure your business is making the most of this tax incentive, while staying compliant with Australian tax laws. There are tips and tricks on some eligible assets, so please consult with an expert to ensure your purchase is eligible before going ahead.
If you don’t know where to start, the team at Hoffman Kelly is here to help! Our experts are here to help discuss new asset purchases and the tax benefits your business can receive, and help gain you access to Temporary Full Expensing before June 30th, 2023.
Contact us today to sort out your tax planning!
Call us on (07) 3394 2311, or message us at mail@hoffmankelly.com.au
