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  • JobMaker Plan – temporary full expensing to support investment and jobs

    Temporary full expensing extension

    On 11 May 2021, as part of the 2021–22 federal Budget, the Australian Government announced that it will extend the temporary full expensing incentive for 12 months until 30 June 2023.

    This extension is not yet law.

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    Temporary full expensing

    On 6 October 2020, as part of the 2020–21 Budget, the government announced it will support businesses and encourage new investment, through a temporary full expensing incentive. This measure is now law.

    Businesses with an aggregated turnover of less than $5 billion can immediately deduct the business portion of the cost of new eligible depreciating assets. Corporate tax entities unable to meet the $5 billion turnover test can still be eligible for temporary full expensing under an alternative test. The eligible new assets must be first held and first used, or installed ready for use for a taxable purpose, between 7:30pm AEDT on 6 October 2020 and 30 June 2022.

    For businesses with an aggregated turnover of less than $50 million, temporary full expensing also applies to the business portion of eligible second-hand depreciating assets.

    Businesses can also deduct the business portion of the cost of improvements to eligible depreciating assets (and assets acquired before 7.30pm AEDT on 6 October 2020 that would otherwise be eligible assets) if those costs are incurred between 7.30pm AEDT on 6 October 2020 and 30 June 2022.

    Businesses can choose not to apply temporary full expensing on an asset-by-asset basis.

    The measure also extends the time by which assets that qualify for the existing enhanced instant asset write-off incentive that applies to small and medium sized businesses. These assets must be first used or installed ready for use for a taxable purpose by 6 months, to 30 June 2021.

    Small businesses (with aggregated turnover of less than $10 million) choosing to apply simplified depreciation rules can deduct the balance of their general small business pool for income years ending between 6 October 2020 and 30 June 2022. The 'lock out' rules that prevent small businesses from re-entering the simplified depreciation regime for five years if they opt out of the regime are suspended until 30 June 2022.

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      Last modified: 21 Jun 2021QC 63857