Recently, the Australian Federal Parliament passed the ‘Treasure Laws Amendment (2020 Measures No. 6) Bill 2020,’ which allows businesses to refuse temporary full expensing and other business incentives. The amendments will be measured on an asset-by-asset basis, so you should talk to your business accountant for more information about your specific business needs.
This bill creates flexibility for those who do not wish to claim full or accelerated write-offs, however, it does not permit an option in which businesses can refuse the Instant Asset Write-Off (IAWO) for assets worth less than $150,000. Also featured inside the bill is a new balancing adjustment in regards to prior written-off assets.
What Changes Are Coming Into Effect?
During meetings with key stakeholders, it was suggested that the rules be made optional because, in many cases, large investments would result in substantial tax losses for businesses. The new legislation now features an ‘opt-out’ option that allows businesses to decide against writing off if they do not wish to. The asset-by-asset nature of this bill makes it extremely flexible for business owners and business accountants alike.
What Were the Accelerated Depreciation Procedures?
Previously, the ‘backing business investment’ initiative allowed a 50% up-front deduction for depreciating assets that passed specific criteria and were used from March 12, 2020, to June 30, 2021. This applied to businesses with an aggregated turnover of up to $500 million. Alternatively, a 100% up-front deduction applied as part of the temporary full expensing budget measure for eligible depreciating assets used between October 7, 2020, and June 20, 2022. This applied to businesses with an aggregated turnover of less than $5 billion.
When Does This Come Into Effect?
This is a new change; therefore, it’s important to talk to your business accountant as soon as possible. The opt-out rule will apply to the 2020 and 2021 years for the ‘backing business investment’ incentive, and the 2021 and 2022 income years for the full expensing measure.
What Should I Do Next?
Contact your business accountant to discuss the options that are relevant to you and how this change will impact your specific business needs. Ph (07) 3823 2344.
The information in this article is general in nature and might not be right for your circumstances. Please arrange a meeting with one of our Accountants to discuss your particular needs.