You can make a choice to opt out of temporary full expensing for an income year on an asset-by-asset basis if you are not using the simplified depreciation rules.
However, you must notify us in an approved form that you have chosen not to apply temporary full expensing to the asset for an applicable income year.
From 1 July 2021, you must use the tax return to let us know of your choice to opt out of temporary full expensing. The choice is unchangeable and you must notify us by the day you lodge your tax return for the income year to which the choice relates.
We can in some instances allow additional time for you to make a choice to opt out of temporary full expensing. If you are seeking additional time to make this choice, you will need to write to us.
How to write to us
You need to:
- clearly mark your request as ‘Temporary full expensing discretion request’
- outline why you need additional time to make the choice.
Online
If you're a tax agent, submit your request using Online services for agents.
If you use Online services for business, submit your request using Online services for business.
Post
You can post your request to us at:
Australian Taxation Office
PO Box 3000
PENRITH NSW 2740
Example
Example: choice to not apply temporary full expensing in one year and temporary full expensing applying in a later year to same asset
Bill operates a demolition business as a sole trader. The business has an aggregated turnover of $1 million for the 2020–21 and 2021–22 income years. Bill does not use the simplified depreciation rules.
On 10 January 2021, Bill purchases a second-hand bulldozer for $200,500 and immediately uses it wholly for business purposes. The bulldozer qualifies for temporary full expensing in the 2020–21 income year. However, Bill chooses to opt out of applying temporary full expensing to the bulldozer in his 2020–21 tax return. Bill will work out the decline in value of the second-hand bulldozer under the general depreciation rules.
On 7 August 2021, Bill installs an alarm in the bulldozer for $1,200. The cost of this improvement to the bulldozer is eligible for temporary full expensing in the 2021–22 income year. If Bill does not opt out of applying temporary full expensing to the bulldozer in his 2021–22 tax return, he must work out the bulldozer’s decline in value under the temporary full expensing rules for the 2021–22 income year. This is the sum of the:
- improvement cost of $1,200 incurred during the temporary full expensing period
- bulldozer’s decline in value (disregarding the improvement cost) on the acquisition cost of $200,500, which would be worked out under the general depreciation rules.
If Bill wishes to opt out of applying temporary full expensing to the bulldozer for the 2021–22 income year, he will need to complete the relevant opt out labels in his 2021-–22 tax return.
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Choices available if you're not using the simplified depreciation rules.