Using the Instant Asset Tax Incentives to Benefit your Business

Applicable for Financial Year July 2021 – June 2022

Are you looking for energy efficiency upgrades? This instant asset write-off initiative by the federal government will help you to reduce your expenses and enhance your ROI this end of the financial year. Eligible assets for this government initiative include all HVAC system equipment (such as chillers, boilers, fans and pumps), Building Management System (BMS) upgrades, commercial solar PV systems, and energy efficiency improvements such as variable speed drives etc.

What are the Instant Asset Tax Incentives?

The FY20/21 Federal Budget announced in October 2020 offers numerous energy opportunities for businesses struggling with the economic downturn caused by the COVID-19 pandemic. The federal government has expanded their tax incentives for energy management upgrades by expanding the instant asset write-off and implementing new time-limited temporary full expensing provisions to encourage capital investment.

Businesses which are eligible for these instant tax write-offs can claim immediate deduction for the business portion of the cost of the asset in the year the asset is first used or installed and ready for use by 30 June 2022. Using this for efficient equipment means that businesses’ tax savings can be added onto their energy efficiency savings which amplifies the financial benefits of these upgrades.

What makes a business eligible for this write-off?

To be eligible for this tax incentive, the aggregate turnover must be less than $5 billion.

What assets are eligible for the write-off?

Only depreciating assets are eligible for temporary full expensing. The asset must also be either new or second hand (If it is second hand the aggregate turnover must be below $50 million).

It must be:

• Held by the business either on or after 7.30 pm AEDT on the 6 October 2020.
• First used or installed ready for use by the business for a taxable purpose between 7.30 pm AEDT on 6 October 2020 and 30 June 2022.

What assets are excluded from the write-off?

Excluded assets include:

• Assets that are allocated to a low-value pool or a software development pool.
• Certain primary production assets.
• Any asset that will never be located in Australia or not be used principally in Australia for the principal purpose of carrying on a business.

Please check with Conservia or ATO website for further details on the excluded assets.

How much can the business claim back?

Businesses can immediately deduct the full cost of a new, eligible asset installed or ready for use between 6 October 2020 to 30 June 2022 with no limit on asset value. Businesses can also immediately deduct the full cost of improvements made to existing depreciable assets between 6 October 2020 to 30 June 2022.

In addition small and medium enterprises with a turnover of less than $50 million are able to immediately deduct the cost of all second-hand assets installed or ready for use between 6 October 2020 and 30 June 2022. Furthermore, all installation costs are also included in the cost of the asset.

What should you do now?

If this interests you contact Conservia today to get more information to see if your assets are eligible for this government tax initiative. This government incentive ends June 2022.

If you have any building equipment or BMS which requires upgrading or improvements, now is the time to act. Get in touch with our experts today to make the most of the Instant Asset Tax Incentives here.