8. Tax incentives for business equipment investment

Business investment support

Businesses with turnover of less than $500 million can deduct depreciation at an accelerated rate.  This only applies to new assets purchased between 12 March 2020 and 30 June 2021.  The asset cannot be previously used by another entity.

Eligible businesses will be able to deduct 50 per cent of the cost of an eligible asset in the year that the asset is first used or installed ready for use for a taxable purpose, with existing depreciation rules applying to the balance of the cost in subsequent income years.

The measure does not apply to assets where commitments to hold, construct or use the asset were entered into before 12 March 2020.  The incentive is intended to stimulate new investment rather than benefiting investment that has already been committed to.

Increasing the instant asset write off until 30 June 2020

From 12 March 2020 until 30 June 2020, the instant asset write off will increase from $30,000 to $150,000 for businesses with turnover of less than $500 million.

The asset purchased can be new or used and must be installed and ready to be used in the timeframe. 

The asset threshold is due to revert back to $1,000 and will be restricted to small business with a turnover of less than $10 million from 1 July 2020.

The legislation does not suspend or disregard the car limit and there is no exception for cars purchased that exceed $57,581.

If the balance of a small business entity’s general small business pool is less than $150,000 at the end of an income year that ends on or after 12 March 2020 but before 1 July 2020, the small business entity can claim a deduction for the entire balance of the pool.