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  • Interaction of tax depreciation incentives infographic

    This infographic provides a summary of information about the Interaction of tax depreciation incentives (PDF, 1.1MB)This link will download a file.

    In 2020, the government introduced measures to help businesses recover from the impacts of the coronavirus pandemic (COVID-19).

    Eligible business entities may want to know which tax depreciation incentive is right for them.

    This information explains the depreciation incentives that are available and when businesses could consider using them.

    On this page

    Depreciation incentives

    Depreciation incentives include:

    Temporary full expensing

    Temporary Full Expensing allows full write-off for eligible assets first held at or after Budget Time 6 October 2020.

    ‘Temporary’ means it does not apply to assets first used or installed for taxable purposes after 30 June 2022.

    For asset eligibility and exclusion rules, see temporary full expensing.

    Note: as part of the Budget 2021–22, temporary full expensing is to be extended for another year. The measures announced as part of the Budget are not yet law. We will update this content once the extension is law.

    Instant Asset Write-Off - to 11 March 2020

    Instant Asset Write-Off – to 11 March 2020 allows full write-off for eligible assets costing less than $30,000 if first acquired at or after Budget Time 2 April 2019*.

    Assets must have been first used or installed for a taxable purpose between 2 April 2019 and 11 March 2020.

    For asset eligibility and exclusion rules, see instant asset write off.

    Instant Asset Write-Off – from 12 March 2020

    Instant Asset Write-Off – from 12 March 2020 allows full write-off for eligible assets costing less than $150,000 if first acquired at or after Budget Time 2 April 2019* and on or before 31 December 2020.

    Assets must have been first used or installed for a taxable purpose between 12 March 2020 and 30 June 2021.

    For asset eligibility and exclusion rules, see instant asset write off.

    Note: this is Budget Time 12 May 2015 for small business entities using simplified depreciation.

    Backing business investment

    Backing Business Investment allows for an accelerated depreciation of eligible assets first held and first used or installed for a taxable purpose between 12 March 2020 and 30 June 2021.

    For asset eligibility and exclusion rules, see backing business investment.

    Applying depreciation incentives

    The general steps to apply depreciation incentives are:

    • Identify if you are an eligible business by calculating your aggregated turnover.
    • Determine which incentive to apply. Only one incentive can apply for an asset. If more than one incentive could apply, the order of application is (subject to opt out choices)  
    • Take note of whether you can choose to opt out of an incentive.
    • Determine when you first held and first used or installed each asset for a taxable purpose.
    • Consider if any exclusions or specific limits may apply (such as the car limit), even if the incentives are uncapped.

    Full write-off

    Full write-off means deducting the taxable use proportion of the cost of an asset.

    It may also be available for improvement costs for eligible assets. Refer to our more detailed guidance on temporary full expensing for information on when these costs can be claimed.

    Interaction of tax depreciation incentives

    The following table summarises the Interaction of tax depreciation incentives (PDF, 1.1MB)This link will download a file to show which incentives might be available based on your aggregated turnover and the date you first held or used an asset in your business. Refer to our more detailed guidance on these incentives for exceptions and other amounts that may be eligible.

    Summary of the PDF fact sheet

    Business type

    Aggregated turnover

    Temporary full expensing

    (for assets first held after 6 October 2020)

    Instant asset write-off - $30,000 threshold (for assets first used in business to 11 March 2020)

    Instant asset write-off - $150,000 threshold (for assets first used in business from 12 March 2020)

    Backing business investment (for assets first used in business from 12 March 2020)

    Small business (using simplified depreciation)

    Less than $10m

    Yes

    Yes

    Yes

    Yes

    Small business (not using simplified depreciation)

    Less than $10m

    Yes

    No

    No

    Yes

    Medium business

    $10m to less than $50m

    Yes

    Yes

    Yes

    Yes

    Medium to large business

    $50m to less than $500m

    Yes

    No

    Yes

    Yes

    Large business

    $500m to less than $5bn or satisfies the Alternative income test

    Yes

    No

    No

    No

      Last modified: 20 May 2021QC 65714