Due to recent changes in tax law, your business may now use the new full expensing measure and the extended instant asset write-off (IAWO) rules to claim the cost of eligible depreciating assets - such as business equipment - as an immediate tax deduction for the financial year ending June 30.

The full expensing measure allows businesses with an annual turnover less than $5 billion to immediately claim a tax deduction for the full cost of new eligible depreciating assets and the cost of improvements to an existing asset.

There is no cap on the cost of the asset that can be claimed.

If the business has an annual turnover of under $50 million, your company is also eligible to use the full expensing measure to deduct the cost of second-hand depreciating assets.

Eligible depreciating assets are those assets purchased, or first installed and ready for use, between October 6, 2020 and June 30, 2022.

If you don't satisfy the requirements for the full expensing measure, you may still be able to claim a deduction under the extended IAWO rules.

These rules allow businesses with an annual turnover of less than $500 million to immediately claim a deduction for the full cost of new eligible depreciating assets up to $150,000, providing the assets were purchased, or first installed and ready for use between March 12, 2020 and June 30, 2021.

Improvements of less than $150,000 to existing assets may also be claimed as a tax deduction if the improvements were incurred between March 12, 2020 and December 31, 2020.

Where a depreciating asset is eligible for both the full expensing measure and the IAWO rules, the full expensing measures automatically takes priority.

It is important to note where an asset is not wholly used for business purposes, only the business-related portion of the cost can be claimed as a deduction.

Contact your tax adviser or the Findex team at albury@findex.com.au to learn more.