Maximise your tax savings with Full Expensing of Depreciating Assets tax deduction

17/04/2023

As a small business owner, you know that every dollar counts when it comes to growing and improving your business while reducing your tax bill. That's why the Full Expensing of Depreciating Assets (FEDA) tax deduction, an extension of the Instant Asset Write Off measures, is an opportunity you don't want to miss. And with the deadline fast approaching, it’s important to act now.

The Full Expensing of Depreciating Assets (FEDA) tax deduction allows businesses to claim the full cost of eligible assets purchased and installed before the end of the financial year (30 June 2023) – helping to reduce your taxable income and save money.

Here’s everything you need to know about the Full Expensing of Depreciating Assets, including eligibility criteria, financing options, and why you should act now to take advantage of this valuable tax deduction. 

Eligibility criteria

Businesses with an aggregated turnover of up to $5 billion may be eligible for this tax deduction of depreciating assets.  

For businesses with an aggregated turnover of less than $50 million, the full cost of all eligible second hand assets may also be claimed. Eligible assets may include new business vehicles and equipment.  

For businesses with an aggregated turnover of less than $50 million, the assets can be secondhand. It's important to note that the assets must be acquired after 6 October 2020 and installed ready for use by 30 June 2023. 

Unlimited claim of eligible assets

Small businesses can claim an unlimited number of new eligible assets of any dollar value (and eligible asset improvements for new and existing assets), provided that the business has an aggregated annual turnover of less than $5 billion. This means that you can upgrade your equipment without worrying about exceeding a cap. 

Financing options

If you don't have the cash to purchase the equipment you need, there are financing options available to you. You may be able to borrow funds to purchase equipment and still claim a deduction for the cost of eligible items. However, keep in mind that the assets must be installed and ready for use by 30 June 2023. Subject to credit assessment and approval, you may be able fund the following assets: 

- Vehicles and trucks 

- Agri equipment 

- Routers and printers 

- Packaging and wrapping 

- Lasers, yellow goods and edge banners 

- Weighing and engineering 

- Materials handling equipment 

- Wood working (CNC, panel saw) 

- Medical and dental equipment 

- Manufacturing equipment 

Why business owners should act now

The deadline for installation is set for 30 June 2023. This means you should act now to take advantage of this deduction.  

Upgrading your business equipment before the end of the financial year can help you reduce your taxable income and save you money. If you wait until after the deadline, you will not be able to claim the Full Expensing of Depreciating Assets deduction for that financial year. 

Next steps

As a small business owner, taking advantage of tax deductions can make a big difference in the growth and success of your business and the Full Expensing of Depreciating Assets deduction is an excellent opportunity to reduce your taxable income and save money by upgrading your equipment.

To take advantage of this tax deduction, act now before the deadline on 30 June 2023. With our integrated family office model, the Crowe tax consulting team can work with our lending and finance team to help you find the financing options you need to make the most of this tax deduction and achieve your business goals. Get in touch with us today. 

The views and opinions expressed in this article are those of the author/s and do not necessarily reflect the thought or position of Crowe Australasia.