Around 99 per cent of businesses will be able to write off the full value of assets they purchase as part of the Federal Government’s response to COVID-19.
Businesses with a turnover of up to $5 billion can immediately deduct the full cost of eligible depreciable assets acquired from 7:30pm (AEDT) on 6 October 2020 and first used or installed by 30 June 2022.
The move aims to unlock investment, expand the productive capacity of the nation and create tens of thousands of jobs.
Treasurer Josh Frydenberg said small businesses will buy, sell, deliver, install, and service these purchases.
“To complement this full expensing, the Government will also temporarily allow companies with a turnover of up to $5 billion to offset tax losses against previous profits on which tax has been paid,” Frydenberg said in a statement.
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“This will provide a targeted cash flow boost that businesses across the country desperately need.
“Normally, businesses would have to return to profit before they can use their losses, however, these are not normal times.”
Losses incurred to June 2022 can be offset against prior profits made in or after the 2018-2019 financial year.
The Federal Government will also provide $105 million in tax relief to expand access to a range of small business tax concessions by lifting the aggregated annual turnover threshold for these concessions.
Businesses with an aggregated annual turnover between $10 million and $50 million will be able to access up to 10 small business tax concessions.
“The expanded concessions will apply in three phases, with the first phase starting from 1 July 2020. The changes will reduce red tape and support around 20,000 businesses to attract workers and retain jobs,” Frydenberg said.
“The Government will also enhance previously announced reforms to invest an additional $2 billion through the Research and Development Tax Incentive. These changes will commence from 1 July 2021 and help more than 11,400 companies that invest in research and development to create the jobs of today and tomorrow.
“Tax relief for hard-working Australians and businesses is part of the Government’s Economic Recovery Plan to create jobs, rebuild the economy and secure Australia’s future.”