Asset tax write off gets new life

By: Andrew Hobbs

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  • Earthmovers & Exacavators

Businesses will be able to count the costs of buying and repairing depreciable assets as a tax expense up until June 30, 2022, under a new budget measure.

Asset tax write off gets new life
Businesses will be able to write off the cost of depreciable assets up until June 30, 2022. Image courtesy Alamy


Generous business tax concessions made in the Federal Government’s budget, released last night, have been welcomed by industry groups.

Among a series of announcements made last night was a policy treasurer Josh Frydenberg says will help "kick start activity in the private sector."

"Businesses with a turnover of up to $5 billion will be able to immediately deduct the full cost of eligible depreciable assets acquired from 7:30pm (AEDT) on 6 October 2020 and first used or installed by 30 June 2022," he says.

"Small businesses will buy, sell, deliver, install, and service these purchases... It will unlock investment, expand the productive capacity of the nation and create tens of thousands of jobs."

The policy, which does not cover mining businesses, has no limit on value of assets eligible for full expensing.

Budget documents say the cost of improvements to existing eligible depreciable assets made during this period can also be deducted in full.

"Full expensing reduces the after-tax cost of new investment and provides a cash-flow benefit for businesses that acquire eligible assets," the documents say.

"The time-limited nature of the measure will provide a strong incentive for businesses to bring forward investment projects before it expires."

The measure is estimated to apply to around $200 billion worth of investment and will cover around 3.5 million businesses, which the government says is over 99 per cent of the businesses currently operating in Australia.

This significantly builds upon the enhanced $150,000 instant asset write-off and the Backing Business Investment measures introduced on 12 March 2020 as part of the Government’s response to COVID-19.

Civil Contractors Federation Queensland chief executive Damian Long says the incentive is a demonstration of the government's support for business. 

"The extension to the asset write off to use or install these assets is a sensible inclusion in the budget," he says.

"Assets for construction can have a long lead time so the extension should accommodate this."

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