The 2020 Budget has delivered immediate income tax deductions to businesses for investment in capital assets
The Government is really keen for business to invest and the recent budget announced the introduction of an immediate tax deduction for purchase of plant and equipment. This will enable businesses with an aggregated annual turnover of less than $5 billion to fully expense the cost of new depreciable assets and the cost of improvements to existing eligible assets in the first year of use. This means that an asset’s cost will be fully deductible upfront rather than being claimed over the asset’s life.
While many businesses were already eligible for an instant asset write-off for asset purchases of up to $150,000, this measure does not cap the asset’s cost, and eligibility for the higher instant asset write-off has been significantly broadened and extended (the existing $150,000 instant asset write-off applies to businesses with turnover less than $500 million and will not apply to purchases after 31 December 2020).
For businesses with an aggregated turnover under $50 million, a full tax deduction is also available under these measures for the purchase of second-hand assets.