Make the Most of Temporary Expensing Measures and Asset Threshold Increase in 2023
As we approach the end of the financial year, it’s essential for businesses to stay informed about the latest changes in tax regulations.
Understanding the Deadline for Temporary Full Expensing Measures
In particular, 30 June 2023 marks an important deadline for the temporary full expensing measures introduced as part of the COVID stimulus packages by the former Government.
To take advantage of these concessions in the 2023 financial year, it is crucial to have your assets installed and ready for use by that date.
Temporary Increase in Instant Asset Threshold: An Opportunity for Small Businesses
In the recent Federal Budget, the Government announced some exciting news for small business entities.
Starting from 1 July 2023 until 30 June 2024, there will be a temporary increase in the instant asset threshold to $20,000.
These concessions are exclusively available to small business entities with an annual turnover of under $10 million.
This increase in the instant asset threshold provides an excellent opportunity for eligible businesses to deduct the full cost of eligible assets that are first used or installed and ready for use between 1 July 2023 and 30 June 2024, as long as they cost less than $20,000.
Deducting the Full Cost of Eligible Assets
What does this mean for your business?
It means that you have a chance to invest in necessary assets and deduct the entire cost, thereby improving your cash flow and reducing your taxable income. This additional flexibility can significantly benefit small businesses, allowing them to invest in essential equipment or upgrade technology without having to bear the full financial burden.
Depreciation for Assets Exceeding $20,000 Threshold
However, it is important to note that any assets exceeding the $20,000 threshold can still be placed in the small business pool. These assets will be depreciated at a rate of 15% in the first year and 30% in subsequent years.
This option ensures that you can still claim deductions for higher-value assets over a longer period.
Taking Proactive Steps to Benefit from the Measures
To make the most of these temporary expensing measures and the increased asset threshold, we recommend taking proactive steps.
Start by assessing your business needs and identifying any assets that may require replacement or upgrade. Consider the potential tax benefits of investing in eligible assets before the end of June 2023.
Partnering with Johnsons MME for Professional Advice
We understand the importance of keeping up with the ever-changing tax landscape and maximising the available concessions for your business.
Talk to us about how we can assist you in navigating these temporary measures, ensuring you make informed decisions that align with your business and financial goals.
Disclaimer: The information provided in this article is general in nature and should not be considered as professional advice. We recommend consulting with a qualified accountant to discuss your specific circumstances and how these measures may apply to your business.
Danny Salmon OAM
Associate, Business Services