Article
Tax Depreciation – Again A Hot Topic In The Federal Budget
October 07, 2020
Written by Zac Gleeson, Director
Yet again, and as it has been in recent years, tax depreciation was in the limelight throughout the delivery of the federal budget by treasurer Josh Frydenburg last night.
In the Treasurer’s own words, the changes to tax depreciation is a ‘game changer’. A massive 99% of businesses (that is businesses turning over less than $5b) will be able to deduct the full cost of Division 40 eligible capital assets acquired post 7.30pm last night the 6th of October 2020 and first used prior to 30 June 2022. This ‘temporary full expensing of eligible capital assets’ will allow businesses to claim a large tax deduction in the financial year the expense incurred. Division 40 assets include plant and machinery as well as assets commonly found in workplaces such as carpets, window furnishings, workstations, air-conditioners and reception furniture. This plan will apply to new depreciable assets as well as the cost of improvements to existing eligible assets.
The instant asset write-off for second-hand assets costing less than $150,000 will still be allowed as long as they’re purchased by 31 December this year. Small businesses utilising the simplified depreciation pool will also be able to completely write-off the balance of their depreciation pool at the end of the income year.
Other exciting news coming out of the budget in relation to property investment is the scrapping of capital gains tax on granny flat arrangements. Set to apply from 1 July 2021 any formal arrangements between family members, or people with personal ties, where an income is being sought due to person/s residing in a granny flat on your principal place of residence will not trigger a CGT event at the point of sale, even if significant income and tax breaks have been claimed. This will allow home owner’s in this situation to claim significant depreciation benefits without the increase in CGT at the point of sale.
Should you have any queries in relation to these measures please do not hesitate to contact a tax depreciation expert at GQS on 1300 290 235.
