The temporary full expensing scheme that the federal government introduced to help businesses cope financially during the COVID-19 pandemic is currently scheduled to end on 30 June this year.
Read on to find out everything you need to know about the scheme and how you can take advantage of it.
What is the temporary full expensing scheme?
The temporary full expensing scheme allows you to write off the full cost of a business asset as a tax deduction for the 2020/2021 and 2021/2022 financial years, provided you meet the scheme’s eligibility requirements.
To be eligible, your business must have:
- An annual turnover of less than $5 billion in the 2018/2019, 2020/2021 or 2021/2022 financial years (if you are claiming a tax deduction for a new asset).
- An annual turnover of less than $50 million (if you are claiming a tax deduction for a second-hand asset).
- Bought or improved the claimed asset between 6 October 2020 and 30 June 2022.
Is the temporary full expensing scheme likely to be extended?
In the federal government’s budget for 2021/22 that was delivered in May 2021, Treasurer Josh Frydenberg announced a plan to extend the temporary full expensing scheme for another 12 months. This extension would mean the scheme would end on 30 June 2023 instead of 30 June 2022.
However, this proposal has not yet become law, and with a federal election looming, there is no guarantee that the legislation will be passed before Australians head to the polls. It also means that if there is a change of government, then there is no guarantee that the scheme will be extended.
The long lead time for new assets due to COVID-19
One of the many negative business side-effects of COVID-19 restrictions that have been in place around the world for much of the last two years has been supply chain disruptions. An example is the global shortage of semiconductor chips that is affecting vehicle manufacturing and many other industries.
Many businesses are facing lead times of 9 months or more for new business assets.
As it currently stands, there are only four months until the temporary full expensing scheme ends (unless it’s extended). If your business is facing a longer lead time for the new business assets you need, then buying suitable and available second-hand assets before June 30 may be an option for you.
Buying second-hand assets under the temporary full expensing scheme
As mentioned earlier, second-hand assets can be claimed under the temporary full expensing scheme if your business meets the eligibility requirements. If you do, you will be able to take advantage of the temporary full expensing scheme if it ends on June 30 this year.
The bottom line
It can be a smart business decision to take advantage of any available government financial incentives to help your business during these tough economic times, even if it means buying quality second-hand assets rather than waiting too long for new ones and missing out on the temporary full expensing scheme.
If you’re looking into Temporary Full Expensing, you may want to consider your options on how you can access these initiatives. Earlypay lends a helping hand to businesses across Australia with equipment financing for SMEs and invoice financing of unpaid invoices. From smaller start-ups to large enterprises, Earlypay may be able to help your business not only improve its cash flow but be able to redirect much-needed funds to areas of your business that really need it.
If you think your business can benefit from Earlypay's finance offerings and would like to find out more, please contact our helpful team today on 1300 760 205.
If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].