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Backing business investment (BBI) and Instant Asset Write Off (IAWO)

Backing business investment—Accelerated depreciation


Who is eligible?

Businesses with an aggregated turnover of less than $500 million in the year they're claiming the deduction.

Eligible Assets

The depreciating asset:

  • is new and not previously held by another entity (other than as trading stock),

  • is first held on or after 12 March 2020; however, if the asset is first held between 7.30 pm (AEDT) on 6 October 2020 (2020 budget time) and 30 June 2022 you must use Temporary Full Expensing.

  • is not entitled for temporary full expensing or instant write-off rules.

Assets that not eligible

  • second-hand depreciating assets,

  • some specific Division 40 assets (low value and software development pools),

  • certain primary production assets,
  • buildings and other capital works for which you can deduct amounts under Division 43, or

  • other specific capital asset and expense deductions.

There is no limit on the cost of an eligible asset unless it is a passenger vehicle.

Working out the deduction

Different rules apply when calculating your deduction, depending on whether you are using the simplified rules for capital allowances for small businesses.

  • Simplified Business Entity (SBE):

    • Aggregated turnover >$10 million and use the simplified depreciation rules.
    • Asset cost is $150,000 or more (and not subject to temporary full expensing) and is added to the general small business pool.
    • The depreciation rate is 57.5% (rather than 15%) of the business portion of a new depreciating asset in the year you add it to the pool.
  • In later years the asset will be depreciated under the general small business pool rules.
  • Non-Simplified Business Entity (SBE):

    • Aggregated turnover >$500 million and do not use the simplified depreciation rules (and not subject to temporary full expensing).
    • Eligible assets that cost $150,000 or more.
    • The amount your entity can deduct in the income year the asset is first used or installed ready for use is:
    • 50% of the cost (or adjustable value where applicable) of the depreciating asset.
    • plus the usual depreciation percentage at a reduced rate of 50%.

Enhanced Instant Asset Write Off (IAWO)


Who is eligible?

Businesses with an aggregated turnover of less than $500 million in the year they're claiming the deduction. Eligible businesses can claim an immediate deduction for the business portion of the cost of an asset.

Eligible Assets

  • for assets used or installed ready to use between 12 March 2020 until 30 June 2021.
  • cost of an asset is $150,000 (up from $30,000) for which an immediate deduction can be claimed.

A car limit applies to the cost of passenger vehicles (except a motorcycle or similar vehicle) designed to carry a load less than one tonne and fewer than nine passengers. The car limit is:

  • $57,581 for the 2019–20 income year
  • $59,136 for the 2020–21 income year

Assets that not eligible

  • an asset that has previously applied temporary full expensing.
  • assets that are leased out, or expected to be leased out, for more than 50% of the time on a depreciating asset lease.
  • assets allocated to the low-value pool, software development pool.
  • horticultural plant
  • assets used in research and development (R&D) activities
  • capital works, including buildings and structural improvements

Changes to returns types in MYOB Tax

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