Accelerated Depreciation Rates

The Government is introducing a time-limited 15-month investment incentive to support business investment and economic growth over the short-term, by allowing businesses to adopt accelerated depreciation rates.

Benefit

Deduction of 50 per cent of the cost of an eligible asset on installation, with existing depreciation rules applying to the balance of the asset’s cost.

Eligibility

All businesses with aggregated turnover below $500 million.

Timing

New assets acquired after the announcement and first used or installed by 30 June 2021.  That’s for a 15-month period.

What is and isn’t covered

New assets like plant, equipment, fixtures and fittings, computer equipment etc. including specified intangible assets, such as patents
Does not apply to second-hand working assets, or buildings and other capital works (sewerage, power and gas lines, etc.)

Example of Accelerated Depreciation Rates

$50,000 machine with an economic life of 10 years

Current depreciation deduction = $5,000 per year

New situation

  1. Purchased prior to 30 June 2020

            – Instant asset write-off applies = $50,000 tax deduction

  1. Purchased after 1st July 2020 and prior to 30th June 2021

            – $50,000 x 50% = $25,000
            – PLUS Remaining $25,000 x 10% = $2,500
            – Total claim in year 1 = $27,500

Advice
If you need advice on the tax changes, contact Noel May or Amanda Klye on
(03) 9585 7555 or enquiries@mktax.com.au

Previous post:

Next post: