Business Owner’s Guide to Australian Tax Depreciation Incentives


Depreciation can be a tricky topic for business owners, especially when it involves different rules and thresholds. But in Australia, the tax office (ATO) has introduced some helpful incentives to make things simpler. These incentives can help businesses lower their taxable income and pay less in taxes. This guide breaks down the key incentives: Temporary Full Expensing, Instant Asset Write-offs, and the Backing Business Investment scheme.

1. Temporary Full Expensing:

– For What: Things you bought and used for your business after 7 pm on 6 October 2020.
– Until When: You can keep using this until 30 June 2022.
– Who Can Use: Businesses with a turnover below 50 million.
– What’s Not Included: Some types of assets and certain works are not covered.
– Can You Change Your Mind: Yes, you can choose not to use it for specific things.

2. Instant Asset Write-off:

– How Much: You can write off things under $30,000 if you got them after 2 April 2019, or up to $150,000 if you got them between 2 April 2019 and 31 December 2020.
– When to Use: The things must have been ready to use between certain dates in 2019-2021.
– What’s Not Included: Some assets are not covered, like things you plan to rent out or certain types of software.
– Small Business Info: If you’re a small business not using a simplified method, this might not apply to you.

3. Backing Business Investment:

– When You Can Use It: For things you bought and used between 12 March 2020 and 30 June 2021.
– New or Used: It only works for new things, not second-hand ones.
– What’s Not Covered: Some types of farming equipment and things that will never be in Australia are not eligible.

4. Opt-out Choices:

– Can You Change Your Mind: Yes, for Temporary Full Expensing and Backing Business Investment, you can decide not to use it for certain things.
– What You Need to Know: Once you say yes to using it for something, you can’t change your mind later.


Understanding and using these tax incentives can help Australian businesses a lot. Even though the rules might seem a bit complicated, thinking about who can use them, what’s included, and when you can change your mind will make things easier. By using these incentives wisely, businesses can save money and set themselves up for success in the long run.