Businesses with an aggregated turnover of less than $500 million in an income year can deduct capital allowances for a qualifying depreciating asset at a rate of 50% of its cost. This is in addition to the normal depreciation that is claimed on the cost of the asset after deducting the 50% amount.
A qualifying depreciating asset must satisfy several conditions, including:
- it must be new and not have been previously held by another entity (other than as trading stock or for testing purposes),
- it is an asset for which an entity has not claimed depreciation deductions, including under the instant asset write-off rules, and
- it is first held, and first used or installed ready for use, for a taxable purpose between 12 March 2020 and 30 June 2021.
It should also be noted that a small business entity (that is, an entity with turnover below $10 million using the simplified depreciation rules) can deduct depreciation at the rate of 57.5% for the “taxable purpose” proportion of the cost (or the adjustable value) of a “qualifying depreciating asset” where it is added to the general small business pool and it is held and used, or installed ready for use, between 12 March 2020 and 30 June 2021 (inclusive).