Instantly write off your assets. Source: Unsplash/Lucas Favre

Mark Story

Cheat sheet on depreciation: Temporary full expensing, instant asset write-offs, and traditional depreciation

Mark Story
5 minute Read

When depreciating or ‘writing off’ your business assets, there are four methods the Australian Taxation Office (ATO) will accept, which you have to apply in descending order. 

The method currently at the top of the list is temporary full-expensing, which allows SMEs to immediately write-off the full value of all new (or used) assets, without limits on the value of individual purchases. ‘Temporary’ refers to the fact that it does not apply to assets first used or installed for taxable purposes after June 30, 2022, while it expires on June 30, 2023.

It follows from the instant asset write-off, first extended to $20,000 from $1,000 in 2015, then to $150,000 in 2019. Temporary full expensing removed the value cap on purchases from October 2020.

If you opt out of using temporary full expensing, you must use the instant asset write-off. If you opt out of the instant asset write-off, you must use the backing business investment accelerated depreciation rules. If you opt out of the accelerated depreciation rules, you can use traditional depreciation measures.

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