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  • Alternative income test for temporary full expensing

    If you're a corporate tax entity and you can't meet the $5 billion turnover test, you may still be eligible for temporary full expensing. This is if both of the following apply:

    • Your total ordinary income and statutory income (excluding non-assessable non-exempt income) is less than $5 billion for either the
      • 2018–19 income year
      • 2019–20 income year if that year ends on or before 6 October 2020.
    • The total cost of certain depreciating assets (including cost of improvements) held and first used, or first installed ready for use, for a taxable purpose in the 2016–17, 2017–18 and 2018–19 income years (combined) exceeds $100 million.

    When working out whether the total cost of depreciating assets exceeds $100 million, you don't take into account assets that are:

    • intangible assets
    • depreciating assets if it is not reasonable to conclude they would be either
      • used principally in Australia for the principal purpose of carrying on a business
      • located in Australia.

    Assets excluded from temporary full expensing if applying the alternative income test

    You may only be eligible for temporary full expensing under the alternative income test. If so, you can't claim a deduction under temporary full expensing for the usual excluded assets. You also can't claim a deduction under temporary full expensing for:

    • intangible assets
    • assets previously held by your associates
    • assets available for use, at any time in the income year, by your associates or entities that are foreign residents.

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    Last modified: 15 Jul 2021QC 66395