Temporary full expensing of depreciating assets extended
In 2020, the Government introduced temporary tax incentives to help Australian businesses withstand the impacts of COVID-19. One of these temporary tax incentives was temporary full expensing. This incentive has now been extended for eligible businesses until 30 June 2023. Other than the extension, the operation of the regime remains the same.
Corporate tax entities using the alternative income test to determine eligibility for temporary full expensing can now include the cost of depreciating assets that are capital works when determining if their cost of depreciating assets for the 2016-17, 2017–18 and 2018–19 income years (combined) exceeds $100 million.
Loss carry back tax offset tool
You can now use the loss carry back tax offset tool to help you work out if you are eligible to claim the loss carry back tax offset. If you are eligible, you can use the calculator to work out the maximum loss carry back tax offset you can choose to claim. It will also provide the information to include in the labels you need to make your claim in your 2022 Company tax return.
Change in tax rate for base rate entities
The corporate tax rate for base rate entities for 2021-22 is 25%.
For more information, see Base rate entity company tax rates.
Research and development tax incentive amendments
Changes have been enacted to the Research and development tax incentive. These changes, including how the R&D tax offset is calculated, R&D expenditure thresholds and certain integrity measures, apply from the first income year commencing on or after 1 July 2021.
Film tax offsets
On 7 December 2021, changes to the Australian Screen Industry Incentive (Film Tax Offsets) received Royal Assent. The amendments apply to films commencing principal photography on or after 1 July 2021. See Screen AustraliaExternal Link for information of the following changes:
- an increase to Producer offset for eligible film that is not a feature film to 30%, and
- other various threshold and integrity changes across the three film tax offsets.
Offshore banking unit regime
On 13 September 2021, the Amending Australia's offshore banking unit (OBU) regime became law. The Government will remove the concessional tax treatment for OBUs in respect of offshore banking activities, effective from the 2023-24 income year. The interest withholding tax exemption for OBUs will also be removed for interest paid on or after 1 January 2024. For more information, see Changes to Australia's Offshore Banking Regime.
New and modified items in the 2022 Company tax return
The 2022 Company tax return includes the following new items about capital allowances, loss carry back and research and development tax incentive:
Item 9 – Capital allowances – one modified label
- C – Have you self-assessed the effective life of any of these assets?
Label C has been shifted to follow labels A and B at the top of item 9 – Capital allowances.
Item 13 – Losses information – eight new labels
- D – Tax loss 2021-22 carried back to 2018-19
- E – Tax loss 2021-22 carried back to 2019-20
- F – Tax loss 2021-22 carried back to 2020-21
- H – Tax rate 2020-21
- K – Net exempt income 2020-21
- N – Income tax liability 2020-21
- Q – Select your aggregated turnover range for 2020-21 (Select range A to P)
- R – Aggregated turnover for 2020-21.
Item 21 – Research and development tax incentive – two labels
- X – Balancing adjustments – catch up deduction
- W was modified from W – Feedstock adjustment - additional assessable income to W – Clawback amounts – additional assessable income.
Removed items in the 2022 Company tax return
The following labels have been removed from the 2022 Company tax return:
Item 9 - Capital allowances - five removed labels
- V – Are you making a choice to opt out of Backing business investment for some or all of your eligible assets?
- W – Number of assets you are opting out for
- X – Value of assets you are opting out for
- M – First year accelerated depreciation deductions for assets using Backing business investment
- O – Instant asset write-off deductions for non-small business entities.
Capital allowances label changes were made at the end of two depreciation incentives. In March 2020, the Government introduced two depreciation incentives to help businesses with an aggregated turnover of less than $500 million recover from the impacts of the coronavirus pandemic (COVID-19) and support business investment. These were Backing business investment – accelerated depreciation (BBI) and enhanced instant asset write-off. From December 2020, eligible businesses were able to choose to opt-out of applying BBI to eligible assets on an asset-by-asset basis.
2022 Substitute Accounting Period taxpayers (SAPs) who need to opt-out of BBI for assets first used or installed ready for use for a taxable purpose from 1 January 2021 to 30 June 2021 can provide their BBI opt-out choice as additional information. SAPs can opt-out in their Company tax return by completing the Additional information schedule available in Standard Business Reporting (SBR).
The entity needs to confirm the following information in the Additional information schedule:
- whether the entity is making an irrevocable choice to opt out of the BBI measure for either some of the entity's eligible assets or all of the entity's eligible assets, and
- the number of assets you are opting out for, and
- the value of assets you are opting out of.
Note, the entity provides other relevant information pertaining to choice in their Company tax return if they are using the alternative eligibility test, details about their aggregated turnover information and deduction amounts.
Businesses that have previously claimed BBI depreciation deductions for eligible assets in an earlier year, should include at label N – Subsequent year accelerated depreciation deductions for assets using backing business investment, their total depreciation deductions in 2021–22 for these assets.
For assets first used or installed ready for use for a taxable purpose in 2021–22, or improvements to existing assets made in 2021–22, businesses may be eligible for an immediate deduction under Temporary full expensing.
For more information, see:
- Backing business investment – accelerated depreciation
- Instant asset write-off for eligible businesses
- Temporary full expensing
- Interaction of tax depreciation incentives
Item 11 - Consolidation deductions relating to rights to future income, consumable stores and work in progress - two removed labels
Due to such deductions being unlikely to arise after the 2020-21 income year
- D – Pre rules deductions
- E – Interim rules deductions.
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