2022 Tax Tips – Temporary Full Expensing

Today I want give you another 2022 financial year Tax Planning tip and that is around temporary full expensing.

Temporary full expensing allows:

• Businesses with an aggregated turnover of less than $5 billion to immediately deduct the business portion of the cost of eligible new depreciating capital assets.
• Businesses with an aggregated turnover of less than $50 million, to immediately deduct the business portion of the cost of eligible second hand depreciating capital assets.

This applies to eligible assets being 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 2023.

For example if you need a new computer for business and purchase this on or before 30 June 2022. You may be able claim a tax deduction of 100% of the cost of that computer.

Important notes

• You need to check that the asset you want to claim is an eligible asset. Assets located overseas, buildings and some other assets are not eligible assets.
• There may be a cap on the amount you can claim for a deduction for motor vehicles.
• If you only use a portion for business, you can only claim that portion as a deduction.
• If you buy a work truck for $30,000 and claim a 100% tax deduction under temporary full expensing; and you trade this in in say 4 years for a new vehicle and get a $10,000 trade-in. This $10,000 trade-in may be assessable income for you.

Make sure you talk to your tax professional to understand the best option for you.

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